CHECKLIST WHEN ACTING FOR THE LESSOR

 

  1. Pre-lease agreements

 

  • Is there a pre-lease agreement / memorandum of understanding / heads of agreement entered into by the parties or by a real estate agent on behalf of the Lessor?

 

  • If yes, note what needs be reflected in the lease.

 

  • Has the Lessee paid any money to the Lessor or real estate agent?

 

  • If yes, is the deposit refundable or can costs be deducted?

 

  1. Is the lease subject to the Retail Leases Act?

 

  • Minimum term 5 years unless s16 Certificate provided

 

  • Is the shop listed on schedule 1?

 

  • Is the shop in a shopping centre?

 

 

  • Retail Leases Act Applies

 

  • Retail Tenant’s Guide sent to Lessee

 

  • Lessor’s disclosure statement

 

 

  • Retail Leases Act does NOT apply

 

  • Lessor may have costs paid by Lessee

 

  1. Does the lease need to be registered?

 

  • < 3 years (including option)? No

 

  • > 3 years (including option)? Yes

 

  • S16 Certificate required if Retail Leases Act applies

 

  1. Does the lease need to be registered?

 

  • < 3 years (including option)? No

 

  • > 3 years (including option)? Yes

 

  1. Is the Lessee in occupation?

 

  1. Obtain certified copies of Lessor’s ID

 

  1. Searches – confirm description of property. Does street address correspond with folio identifier? – street address search.

 

  • Title search

 

  • To confirm Lessor is the owner

 

  • Section 149 – zoning. Is the use allowed?

 

  • Company search if Lessor is a company to determine

 

  • Who the directors are

 

  • Any charges that may require consent

 

  • Is the Lessor registered for GST?

 

 

  1. Advise client, request particulars of Lessee: financial, experience, referees

 

  1. Request consent of mortgagee

 

  1. Draft lease

 

  1. Advise on lease, suggest amendments / deletions

 

  • Parties:

title search to confirm Lessor on the lease is the owner

 

  • ASIC search if company to confirm if there is only one director or if more than one ensure you have instructions from both (or all) directors.

 

 

  • Real Property Act requirements for signing

 

 

  • Is company seal required? See company constitution

 

  • Premises

 

  • Confirm street address = folio identifier. Street address search.

 

  • Are there any prior leases on title? If so, confirm with Lessor that

 

  • Lease has expired, been surrendered.

 

  • Take measures to remove that lease from the title.

 

  • Mortgaged? Y – mortgagee will be required to consent

 

  • Contact mortgagee for consent requirements

 

  • Advise Lessor regarding mortgagee’s consent requirements – advise on deed of consent.

 

  • Forward Lessee deed of consent

 

  • Term of the lease

 

  • When does the term begin?

 

  • Advise Lessor not to grant possession of the premises until lease is signed.

 

  • To give possession is to grant a lease by ‘parol’.

 

  • Advise Lessor of the implications

 

  • Does it begin some time in the future? – confirm Lessor will be ready to grant possession at that time.

 

  • Option

 

  • Is there an option?

 

  • When can it be exercised?

 

  • Earliest date for exercise? (usually 6 months from end of lease term)

 

  • Latest date for exercise? (usually 3 months from end of lease term)

 

  • Is there more than one option?

 

  • Rent

 

  • Rent inclusive of GST?

 

  • Advise rent + GST figure in case client overlooked it

 

  • Client registered for GST?

 

  • Rent Reviews

 

  • Rent reviews usually occur annually on the anniversary of the commencement lease.

 

  • Annual rent increases:

 

  • Fixed percentage?

 

  • CPI

 

  • Market rent

 

  • A market rent review normally occurs at the end of the term / when the option is exercised.

 

  • GST

 

  • Ensure lease passes on full cost of GST to the Lessee. If GST omitted, the Lessee is required to pay a further 10% GST.

 

  • Outgoings

 

  • The Lessee is usually liable to pay outgoings in addition to the rent.

 

  • What percentage or amount?

 

  • Request previous quarter figures from landlord

 

  • Abatement of rent

 

  • Should the building be destroyed, the rent will cease until the building

 

  • Advise Lessor they should have insurance to cover:

 

  • Loss of building

 

  • Loss of rent

 

  • Assignment and sub-letting

 

  • Does the lease allow it?

 

  • No assignment clause? Unlimited right to assign.

 

  • Repairs

 

  • The Lessee is responsible for repairs caused by use of the premises or damage caused by the Lessee, with the exception of fair wear and tear.

 

  • Repainting clause – how often?

 

  • Insurances

 

  • Lessee to have public risk insurance to the extent of $20million.

 

  • Advise Lessor to get other types of insurance also:

 

  • Fire & theft – usually available as a ‘package’. Reminder

 

  • Workers comp. If the client is new to business

 

  • Default and essential terms

 

  • Which are the essential terms? Advise client.

 

  • Bank guarantee

 

  • Usually equivalent of 3 months rent plus outgoings plus GST

 

  • Bank guarantee?

 

  • Security Deposit? Who is the stakeholder?

 

  • Retail Leases Act? – bond must be paid to the Retail Tenancies Unit

 

  • Guarantee

 

  • Guarantor required? Consider conflict of interest- independent advice

 

  • Duty

 

  • (Stamp) duty is not payable on commercial leases in NSW. Transfers and variations only.

 

  • Use of premises and Council’s consent

 

  • The Lessor gives no assurance that the premises may be used for the permitted use named in the lease.

 

  • Any current DA’s?

 

  • Obtain copy of DA file from Local Council if necessary.

 

 

 

  • Car parking

 

  • Car parking included?

 

 

  1. Points to negotiate / special conditions: is there anything particular to this property that requires special mention in the lease?

 

  • Consider in particular:

 

  • After hours access – is there an additional charge?

 

  • After hours air-conditioning – is there an additional charge?

 

  • Who bears cost of maintaining air-conditioning?

 

  1. Submit draft lease to Lessee’s solicitor or Lessee for signature and return.

 

  • Request cheques for:

 

  • LPMA registration fee $95.00

 

  • Costs (non Retail Leases Act only)

 

  • Mortgagee consent fee

 

  • Mortgagee solicitors costs

 

  • Request also:

 

  • Certificate of currency for public liability insurance

 

  1. Peruse Lessee’s request for amendments to lease – advise client – seek instructions

 

  • Request particulars of Lessee

 

  • Particulars of experience : CV highlighting relevant experience

 

  • Schedule of assets & liabilities, tax returns

 

  • Particulars of financial resources: real estate, money to invest?

 

  1. Respond to Lessee’s request for alterations of lease terms

 

  1. Send lease in final form for execution or agree to handwritten amendments

 

  1. Receive executed lease from Lessee

 

  1. Attend to execution by Lessor

 

  1. Send lease for registration

 

  1. Send registered lease to Lessee, copy to Lessor

 

  1. Bill client

Download Now