Buying and Selling Commercial Leases

Taking a Commercial Lease

Unless one is fortunate enough to be able to purchase the freehold of the building most business owners who are looking for a shop, factory or warehouse will need to lease premises.

Landlords will normally require from small private companies a personal guarantee from its shareholder or directors, and it is not an uncommon requirement for a 6 month rent deposit to be held by the landlord. A personal guarantee should not be lightly given and resisted if possible as it defeats the protection of limited liability.

Most landlords will require references from any potential tenants. The standard references are: a bank reference, an accountant's and two or three trade references. You should negotiate for the minimum deposit required based on the strength of your references.

Negotiate the Best Terms

If the premises you are renting require a partial or complete redecoration, you could ask for a rent-free period for you to redecorate prior to the opening of the premises. It is a matter for agreement between the landlord and the potential tenant as to the length of the rent-free period granted.

One important, but often overlooked, issue is "dilapidations" on terminating the lease. Some leases may require tenants to improve the condition that the premises were in at the outset of the lease. It is always therefore desirable for large, expensive premises for any lengthy term to have an agreed schedule of condition at the outset and an agreed term of the lease that the tenant is required only to hand the premises over at the end of the lease in the same condition.

There is a big difference between granting a new lease and taking an assignment of an existing lease. If you are taking a new lease, we will look into each clause of the new lease and negotiate on your behalf to ensure all terms are favourable and, at the very least, fair and reasonable to you.

If you are taking an assignment of an existing lease, you will not have the opportunity to negotiate the terms but we will point out the terms of which you must be aware.