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Commercial units: early advice saves problems later

14 July 2016 • Danielle Leeming

When leasing commercial units, asking the right questions and getting advice early on can help you secure much more favourable terms, writes Croftons’ Commercial Real Estate Solicitor, Danielle Leeming.

On a recent instruction from a Housing Association client I was asked to support them in securing a lease for one of their first commercial units and offer guidance on the heads of terms that had been put forward by the Landlord.

On reviewing the heads of terms I was able to highlight a number of the key points to the client and suggest possible options to help them obtain more favourable terms. My involvement at an early stage enabled us to secure more favourable repairing obligations for the client which will prove invaluable at the end of the term of the lease when the parties are looking to finalise any potential dilapidations claim.

Key considerations

So, what are the key areas to consider when negotiating heads of terms on a commercial lease? In my view the three most important things to look at are:

 

The rental
Is the rent that has been agreed reflective of other similar properties in the area? If the rent is slightly higher are there factors associated with this particular property which explain the difference in rent? Would the Landlord consider a rent free period?

 

The repairing obligation
What repairing obligation has been put forward by the Landlord or the agent? What condition is the property in? Are there any items which need to be rectified before you take occupation of the property or that you wish to excluded from your repairing obligation with a view to limiting your liability for dilapidations at the end of the term?

 

The term
What is the length of term of the lease? How long has your business been trading? Do you require a get out option if there is a downturn in business? And what are your medium and long term business plans? These will dramatically affect the options available to you.

If you are looking to secure your first commercial unit or are simply looking for ways to negotiate more favourable commercial terms, please get in touch for further information. Click here for my contact details.


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