What You Must Look Out For When Signing a Commercial Lease

What You Must Look Out For When Signing a Commercial Lease

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Your little start-up has survived the critical three-year period and has grown to such an extent that you need to move it out of your home and into proper commercial premises.

Premises

However, before you enter into a commercial lease, it is imperative that you avoid common pitfalls by understanding the legal and contractual implications.

The following are some of the most important issues and aspects you need to be aware of when negotiating and concluding a commercial lease.

1. Beware the standard form lease

At face value standard form leases appear to be the quickest and cheapest route, but you need to be aware that they are generally designed to protect the landlord’s interests. While signing such a lease agreement may appear to be the simplest and cheapest route, you could end up with problems later.  Therefore, take the time to ensure that the lease agreement also protects you.

Related: Indoor Pot Plant or Office Desk?

Consider seeking legal advice before concluding a lease. Even if you are unable to renegotiate a landlord’s standard form lease, at least you will be aware of potentially onerous and one-sided provisions.

 

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2. Premises

Check that the lease agreement describes the premises as accurately as possible in terms of location and size and attach a floor plan if available. Know what access you as the tenant have to common areas such as hallways, rest rooms, kitchens, and lifts. Ask whether additonal rental will be charged on these areas and at what rate.

If the rental is based on ‘letting area’ as opposed to a ‘fixed rental’, it is important that you agree with the landlord on how the premises are measured and what is included in the lettable area, for example balconies, terraces and storerooms. The South African Property Association has a standard measurement method which is commonly used.

You should also be afforded an opportunity after occupation to note defects in the premises, which the landlord is then required to remedy. Whether the landlord remedies all defects or only material defects needs to be negotiated. However, if the defects are of such a nature that you cannot enjoy the use and occupation of the premises, the landlord will be in breach of the lease agreement.

Next page: Understand what is included and excluded in the rental

Related: Is Your Office Making You Fat?

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Shelley Mackay-Davidson
Shelley Mackay-Davidson is a commercial legal consultant at Caveat Legal, specialising in Corporate Commercial Law, Technology Law and Commercial Property Law. She holds a BA LLB (UCT) and Hdip (company law) (UCT) and was admitted as an attorney in 1991.