A commercial lease can tie up a business for years. Read these five clauses closely before you sign.
Many leases make the tenant liable for the rent for the whole lock-in period if it leaves early. Negotiate a shorter lock-in, or a right to exit if the business closes or the premises become unusable.
Check how often the rent rises and by how much — commonly every year or every three years — and whether the increase applies to maintenance charges as well.
The clauses to pin down:
Find out exactly what “restoring the premises” will require, and agree on a record of the premises’ condition at handover. Restoration costs can be larger than the deposit.
A lease of more than a year must be registered. An unregistered long lease is hard to rely on in a dispute, so budget for stamp duty and registration from the start.
A lease of up to a year does not need to be registered, so eleven-month leases save stamp duty and registration costs — at the price of weaker legal protection for longer occupation.
Only if the lease says so. Most commercial leases provide for an interest-free deposit, so negotiate this up front if it matters.
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