25 Jan Tips on lease negotations
Tips on lease negotiations
1. Make sure you understand every term and condition in the offer including the total cost until the lease ends and ask the Landlord or the Landlord’s representative to confirm in writing that the offer meets the Lease Code.
2. Make sure the offer clearly shows the extent of the property, with the boundaries clearly marked on plan and the floor area noted, together with all means of access, any access or areas you must share with other occupiers, any limitation of hours of use, any restrictions in the type of use, any legal or planning limitations or obligations that come with the property.
3. Make sure the offer sets out clearly who the Landlord is, together with any superior landlords, and assume that any Landlord will sell his interest to someone else and that you will have to deal with the new owner.
4. Request written responses from the Landlord, where you expect to need to rely on them. Check that all the things which are important to you and your business have been accurately written down in the Heads of Terms and documented in the lease.
5. It may be helpful to use a checklist of costs (such as that set out below) so that you can ask the Landlord to be explicit about costs and obligations in the lease:
- Service charges
- Utilities Repairs/Dilapidations
- Fitting out/Alterations
Total each year: Total lease cost:
6. Deposits – keep thinking of the deposit as your money and demand that interest on it is accrued at a fair rate. Ask the Landlord to make sure it is held in an account that belongs to you (escrow or stakeholder account) in case the Landlord becomes insolvent.
Throughout the term of the lease, make sure you obtain statements from the Landlord to confirm that the money is still in the account and that all interest earned has been paid to you or, if required by the lease, has been held on your behalf within the account. Check that your deposit will be transferred to the new Landlord if the Landlord sells the property to another owner.
7. Returning deposit – make sure you know when and how you can get your deposit back, such as when you no longer have an interest or have satisfied agreed conditions.
Contributor: James Page