When you lease commercial property you want things to run smoothly so you can get the tenant into the premises as soon as possible and have the rental and income flowing. Now all that is just fine, but the leasing process is quite complex and a few unexpected problems usually arise as you proceed through the leasing stages. Here are some tips from our bulletin for Commercial Real Estate Agents.
It is best for the property manager or landlord to develop a checklist to help lease negotiations and keep matters under control. In a complex property the lease matters are numerous and can slow down the final agreements and access to the premises. That being said, there are no short cuts when it comes to leasing, and the best lease agreement is one that has been well controlled from the start. Never let a tenant have access to the premises until they have fully complied with the terms of the lease agreement and lease.
To help your checklist creation and process for the leasing of the premises here are some things to consider.
- Get the lease document created as quickly as possible. The lease should reflect the essential main terms of agreement between the parties that arose in the negotiations. The landlord’s solicitor should prepare the lease in accordance with the factors of the property and the instructions of the landlord when it comes to standard leases for the property. Some solicitors can take an unacceptable length of time to create a lease document to be signed by the parties. A lease document should be created and presented to the parties for signature within 48 hours of the initial lease agreement. From that point onwards the discussions and debate between the parties can slow things down, so stay on top of all issues and pressure the parties to keep things moving.
- The lease document should always be signed, deposit paid, rent paid, and guarantees lodged, before any premises access is given to the tenant. Everything from the initial lease agreement should have been satisfied and signed off before keys are given to the tenant.
- Fit out plans, drawings, and approvals are required before any tenant fit out works commence. The approvals for such works should have been correctly obtained from the landlord and the local building regulatory authority.
- The finishes and types of materials to be used in the fit out should be approved by the landlord so that the building maintains a level of consistency in presentation.
- Security systems and locks on the premises should be maintained to the building master key system. In this way the landlord and the property manager can access the premises in times of emergency or when and if a lease default occurs.
- The permitted use of the premises should be in accordance with the planning regulations and the lease as signed by all parties.
The process of putting a tenant into a property is complex, and every step of the process should be carefully managed. Keep notes on any discussions and actions taken by all parties.
If you need some more tips on leasing for commercial and retail real estate agents you can get our bulletin here.