Commercial Lease Agreement
Commercial Lease Agreement includes a general purpose leasing agreement contract. Suitable for most commercial properties.A Commercial Lease Agreement between a landlord and a business outlining terms and conditions of property rental. A Commercial Lease Agreement is specific to renters using the property for business or other commercial purposes versus residential use.
The Commercial Lease Agreement Includes:-
- DEFINITIONS AND INTERPRETATION
- RENT AND OUTGOINGS
- Rent Payment
- Rent Review
- Statement of Outgoings
- Outgoings paid by Lessee
- Method of Payment
- Notice to Rebuild
- Notice to Terminate
- Termination following Failure to Rebuild
- Continued Occupation during Rebuilding
- Abatement of Rent
- No Requirement to Rebuild
- RESUMPTION AND EASEMENTS
- USE OF PREMISES
- Permitted Use
- No Noxious Use
- Use of Accessories
- Drains and Wastes
- Services to the premises
- Public Address System
- Garbage and rubbish
- Rubbish Removal
- Overloading of Floors
- Electrical Equipment
- Fire safety
- Light and Air
- Special Services
- Fittings and Fixtures
- Window Displays
- Glass and Signs
- Locks, Doors and Windows
- Light Bulbs, Tubes and Illuminated Signs
- Painting of Interior
- Notices from Public Authorities
- Pest Control
- Notice of Defects
- Exterior Signs
- Pick Up and Delivery
- Lessee Not to Cause Rent Reductions
- Lessee Not to Prejudice Superior Estate
- Consent to assignment
- MAINTENANCE, REPAIR, ALTERATIONS, ETC.
- Maintenance and repair
- Repairs at end of term
- Lessor May Enter to Repair
- Default in Repairing
- Lessor’s Rights to repair and maintain
- Notice of Alterations or refurbishment
- Liens created by Lessee
- Environmental Clauses
- Environmental obligations of the Lessee
- Lessee to co-operate with Lessor’s Environmental Initiatives
- AIR CONDITIONING, FIRE EQUIPMENT, LIFTS AND ESCALATORS
- Repair and Use
- Interference with Equipment
- Faulty Equipment
- Access to Contractors
- Lessee to Comply with Regulations
- Air Conditioning After Hours
- Operating Hours of Building
- ELECTRICITY AND OTHER SERVICES
- Lessee to arrange services
- Lessee to pay for metered services directly
- Failure of services
- OPTION TO RENEW
- Exercise of Option to Renew
- Purchaser of the premises
- INSURANCE REQUIREMENTS
- Lessee to Effect Insurance
- Insurance by Sub-Lessees
- General Insurance Provisions
- Heating and Energy
- Insurance Not to be Avoided
- Fire Safety Regulations
- Additional or increased Premiums
- Lessor is the Attorney of the Lessee
- Occupancy at Risk of Lessee
- Uninsured loss
- No merger
- Lessor to be attorney of the lessee
- QUIET ENJOYMENT AND HOLDING OVER
- Quiet Enjoyment
- Holding Over
- DEFAULT AND TERMINATION
- Re-entry and Surrender of lease
- Essential Terms
- Payment of Rent after Default
- Lessor’s right to Remedy Defaults
- Interest on overdue amounts
- Yielding Up Possession
- Lessee’s Fixtures
- Lessee’s Fixtures Not Removed
- Payment of Rent upon Default
- COMMON AREAS
- Access to Common Areas
- Use of Common Areas
- Exclusion of persons from the building
- Maintenance of Common Areas
- Rules and Regulations
- Control of Common Areas
- Covenants and assignees or successors in title
- Transfer to be complete
- ‘For Lease’ Notices
- 18.12. 46
- Guarantee and Indemnity
- Liability of Guarantor
- Continuing Guarantee and Indemnity
- BANK GUARANTEE
- Increase in Deposit
- Appropriation of Deposit
- Assignment of Deposit
- EXECUTION AND REGISTRATION
- MORTGAGEE CONSENT
- Mortgagee’s Consent
- Lessee’s Trust
- Capacity of Trustee
Answers to frequently asked questions – For More information please visit :- AUSTRALIAN TREASURY
What if the building is sold?
If the building is sold the obligations and rights under the lease generally transfer automatically to the new owner. There are a few personal rights that may need to be transferred (like security bonds) but this is usually dealt with in your lease.
By buying the building with notice of your lease (registration does this) the new owners generally become bound to you as though they were the original landlord. In some cases the landlord is bound in the same way even if they don’t have notice of your lease. Of course, it is always better if the new owner knows about the conditions in your lease. Most States and Territories allow leases to be registered by the Land Titles Office. This is one sure way of a new owner having notice of your lease. If your landlord won’t register the lease, in some States and Territories you can do it yourself. It is the most effective way to protect your interests.
Remember, depending on the term of your lease, it may be very important for your lease to be registered on the title to the land. See page 4 for more details.
What if the tenancy mix changes?
In most States/Territories your landlord is not required to protect you from competition or tell you about proposed tenancy mix changes unless you have a special written clause in your lease. This is why it is important to walk around and have a look at kiosks and tenancy mix before you sign the lease. If you are concerned and promises have been made, make sure that your lease includes these.
What if the landlord disrupts my business?
Retail landlords promise their tenants that they will have quiet possession of the retail space. Under your retail lease legislation you may be given additional rights if your landlord interrupts your business, for example, by creating disruption during refurbishment, putting up special displays on common property, or placing new temporary kiosks. Check your retail lease legislation.
Disruption of business by landlord
Adam’s shop is located within a shopping centre and has good visibility and good passing pedestrian traffic. The landlord allows for a small temporary kiosk selling lollies to open up out the front of the premises. The kiosk inhibits the visibility of Adam’s shop and has the effect of diverting pedestrian traffic around the front of the shop. Adam requests that the kiosk be moved or alternatively that he receive a reduction in rent whilst the kiosk is there. The lease does not say anything about this type of situation, however under the relevant retail legislation; Adam has rights to seek compensation from the landlord for a loss of quiet enjoyment of the premises. Adam would need to prove that his quiet enjoyment of the premises has been disrupted – this is likely to be difficult. It is not enough that the kiosk is affecting his business.
If there is a large space out the front of your premises that you rely on for good visibility of your shop, it will
be in your interest to ensure that the landlord does not do something within that space that negatively affects your shop. Although you normally can’t control who else leases shops within a centre, you may, within the lease document itself, be able to protect large open spaces from being filled with kiosks.
Can I mortgage my lease?
In some States/Territories you can mortgage your lease unless your lease says you cannot. Leases usually say you have to ask your landlord for permission. Your retail lease legislation may set out the steps you and the landlord have to follow when you want to mortgage, and what conditions the landlord can impose.
What if I want to sell my business or let someone else use part of my retail space?
This is often called ‘assignment’ or ‘subleasing’.
Leases usually say you have to ask your landlord for permission or consent if you want to assign or sublease your retail space (and you will usually have to pay the landlord’s costs for the landlord preparing a consent document that you, the new tenant and the landlord will sign). Your lease and the retail lease legislation may set out the steps you and the landlord have to follow, what conditions the landlord can impose and whether
or not you are released from future obligations under the lease after the sale of the business. If your retail lease legislation does not mention release then you are not released from your future obligations under the lease unless the landlord agrees to release you. Your guarantors may also remain liable unless you and they are fully released by agreement with your landlord. It is very important that you get expert advice on this.
What happens if I default under my retail lease?
Each lease can be quite different.
Your lease will tell you something about what happens in your situation. The law is complex so not many leases spell out in full either what is default or all of the consequences of default. It is very important that you get expert advice on what your lease says about default – particularly if you have been issued with a ‘breach notice’ by your landlord. Even a single default can have consequences years later (for example you may be liable for the legal costs of the landlord and future rent).
Most breaches are capable of being fixed, for example those like undertaking works without consent or not operating your business within the required hours.
If you are experiencing financial difficulties, it is important to talk to your landlord and try to come to some arrangement with your landlord before you go into default for non-payment of rent. Non-payment of rent or other monies under a lease is generally treated more seriously than other types of breaches.
Dispute when tenant’s business is sold
Chris has been advertising his business for sale for some time and has now found a potential buyer. Under the lease, he is required to obtain the landlord’s consent to an assignment of the lease to a new tenant. Chris requests the landlord’s consent and is asked to provide details of who the new tenant is, their financial
records and their experience in running a similar business. Chris tells the landlord that he does not have that information and does not believe he should have to provide it to the landlord.
In such circumstances, a lease and the relevant retail lease legislation will generally require the tenant to provide the landlord with the information that the landlord reasonably requests in relation to a proposed new tenant. The landlord is not required to obtain the information for itself. The landlord needs the information in order to assess whether the proposed new tenant will be a good tenant – just as the landlord assessed whether the original tenant would be a good tenant prior to entering the lease.