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19 Nov
Eight common lease traps for corporate tenants

Over the years, we’ve heard many horror stories from tenants who have locked themselves into long leases that unreasonably favour the commercial landlord. It can be next to impossible to extract yourself from a legally binding agreement.

The lesson is to work with a professional consultancy like ACORPP before negotiation and always have your legal representative review the lease document before sign-off.  Here are our top eight tips (or traps for the unwary):

  • Lease terms that are either too short or too long.  Make sure that the term of the lease aligns with your company’s future growth strategies and that you have options to extend the lease if required. 

  • Assignment and subletting conditions that restrict your ability to assign or sublet part of your lease if you have to move or downsize during the term.

  • Rent review clauses that heavily favour the landlord.

  • Outgoings clauses that require you to pay more of the building’s day-to-day operating costs than you should. 

  • Exhaustive maintenance obligations that make you responsible for too many structural building repairs.

  • Onerous reinstatement obligations that require you to restore the building to near original condition when the lease expires and you eventually vacate.

  • Relocation clauses that allow the landlord to move you to an alternative space in the building.

  • Assumption that the landlord will maintain building, plant and equipment, but the lease omits any requirement for them to do so other than ensuring the tenant’s “quiet enjoyment” of the facilities.

 

 

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