Commercial Lease Documents
If you are planning on investing in commercial property, or buying commercial property, it is important that you are aware of any and all current leases connected with the property.
In this video John Gallagher from Argon Law reminds commercial property buyers and investors how to make sure they are getting a complete picture of the current lease arrangements.
Prior to buying or investing in a commercial property it is important to see all documentation related to the lease to ensure you know the agreement. Check if there have been updates or amendments to the commercial lease, as each such event will create a new document. For all lease documents, be sure you hold clean, signed and ideally, registered copies of each such document.
You will also want to be confident of the current rent. Make sure you have all evidence needed to satisfy yourself about the current rent, including correspondence regarding the most recent annual rent review.
It is also important to check if the lease is regulated by retail shop lease legislation. This can be the case, even when the tenant is not a retailer. But if the lease is regulated by retail shop legislation you will also want to review copies of disclosure statements given by the current owner to the tenant in accordance with the retail shop lease legislation.
Checking all the ins and outs of a commercial lease can be complex, but not paying due attention to this matter can leave your commercial property investment with complications and difficulties down the track.
Commercial property lease documents – do you have the complete picture?
Are you thinking about investing in commercial real estate which is currently leased to an existing tenant?
If so, then make sure you’ve been given all relevant documentation.
I’m John Gallagher from Argon Law and I would like to offer you some tips about collecting together all documents relevant to a commercial lease.
Firstly, it is essential that you are provided with the true, complete and current lease. This will often mean that you need to sight multiple documents.
Has the lease been extended? Has it been amended? Each time this happens, there will be a further document created.
Make sure you hold clean, signed and ideally, registered copies of each such document.
The amount of rent payable is obviously of vital importance. This is not always evident on the face of the lease, particularly when the rent increases each year in accordance with an index or formula.
Make sure you have all evidence needed to satisfy yourself about the current rent, including correspondence regarding the most recent annual rent review.
And check if the lease is regulated by retail shop lease legislation. This can be the case, even when the tenant is not a retailer.
For example, a lease of premises in a cluster of premises can potentially be regulated as a retail shop, if a sufficient number of the other premises within the cluster are used for retail purposes.
If that is the case, it will also be important for you to review copies of disclosure statements given by the current owner to the tenant in accordance with the retail shop lease legislation.
So don’t assume that reviewing a lease is about reading a single document.
The full story is almost always more complex than that.
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This information is of a general nature only and is not to be relied on as legal advice. You need to seek your own legal advice about your own specific circumstances.
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