Whilst every commercial or retail property is different in design and usage, a process of moving a tenant into a property should be standardized. This is for the simple reason that the tenant occupation is the beginning of the lease administration process. The leasing or property manager for the property thereby sets the foundation for future occupation and lease stability. Sound lease administration starts at this point. Sound lease administration is the foundation of good property performance.
Close communication with the tenant will ensure that the tenant’s needs and that of the landlord are well balanced in the establishment of lease occupation and commencement. The three parts of the lease establishment and commencement that need balance and monitoring are:
- Lease documentation signing and establishment
- Physical premises fit-out design and usage
- Rent collection and financial guarantees
One important rule needs to be made here about the commencement of lease or premises occupancy. No tenant should be given the keys to the premises until the lease is signed by all parties and the full financial commitment of rent and all guarantees are given. No fit-out work in the premises should commence until all of these things are done. Many a tenant has slowed or avoided the signing of the lease once they get the keys to the premises. If the real estate agent or broker has allowed this to occur, then embarrassment and time wasting disputes evolve.
When all of these three occupancy elements are well managed, then the occupation of the premises starts off in the best way possible setting the scene for positive ongoing relations between interested parties. The interested parties to a new lease occupation are:
- Property Manager
- Leasing Manager
- Legal Advisor for the Landlord
- Financier for the Landlord
One of the common weak links in the leasing process with new tenants can be the poor interaction or failed communication between the leasing manager and the property manager. Both of these people should be working in harmony when new tenants are to commence occupation, given that building relations and other tenants may be impacted by mistakes and miscommunication. Tenants in a property will talk between each other and will inflame problems quickly. This is more the case in retail property with many smaller tenants in the one building.
All instructions and agreements made between the tenant, the landlord, the leasing manager, and the property manager should therefore be made in writing or evidenced as such. It is common for disagreement and disputes to occur at the start of lease occupation given that so much is going on at the one time, so attention to detail in documentation at this point is critical.
An organized approach to tenants moving in to a property is the best way to set the scene for property stability and the future respect between the landlord, the property manager, and the tenants.
A checklist approach to the tenant moving in to your property is productive. Whilst every property is different and therefore special elements of occupation need to be documented and provided for, the list below will get you started on the road to leasing best practice. You can modify the list and change the order to suit your property type and location.
The Lease Move-in Checklist:
- Tenant name and full contact details sourced
- Lease signed and copies served to all parties
- Tenant provided with all emergency contacts and procedures for the building
- Rent, outgoings, and all guarantees paid in accordance with the lease
- Insurances and currency certificates are given by tenant in accordance with the lease
- Any other special conditions of the lease are complied with by the tenant and the landlord
- Landlords works are completed as per lease agreement
- Premises inspection and documentation is made as part of handing keys to the tenant
- Details of fitout changes and plans given
- Approvals of fitout changes and plans given
- Lease commencement date
- Rent commencement date
- Anticipated move in dates and times
- Method of move in and access points for goods and materials entry
- Instructions letter to tenant explaining the move in rules and conditions.
- Building Rules and Regulations Manual is provided to tenant
- Tenant Fitout Guide is provided to tenant
- Advance notice of move is given to other tenants in proximity
- Power, lighting, air conditioning, communications and other services to premises are operational for the tenant move.
- Lift isolation is made (out of main building hours) for the new tenant to use for the move
- Directory board changes are made to allow for the correct new tenant description and location
- All relevant locks and keys are made available for the tenant to use to the premises
- Security passes are organized as necessary for the building security system
- Parking details and documentation is signed and passed issued relevant to the lease and the tenant.
- Storage for the tenant is organized on site as required for the move and the creation of occupancy
- Electricity meters are read for the premises before lease occupation starts.
- Emergency Evacuation Systems and Procedures are provided to the tenant and training provided as necessary.
- Other tenants are advised of the new tenant name and a welcome to the building is provided.
- Rent and other outgoings charges are entered and actioned by the property manager into the building financial system.
- Lease details are checked and entered into the property management system.
- Tenant is met on site as required by the property manager to strengthen communication and feedback.
- Property manager to monitor tenant activity closely for the first few weeks of occupation to ensure full compliance to all agreements and arrangements.
- When the tenant has completed fit-out works, the property manager should check that the finished construction complies with the submitted and approved plans.
This then becomes a way of controlling the start of lease occupation in the most productive and professional way. This will set the scene for a well performing property and investment asset for the landlord.