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The Importance of Legal Review for Commercial Lease Agreements

The Importance of Legal Review for Commercial Lease Agreements

A commercial lease review means a thorough examination of a lease agreement.

The purpose of a commercial lease review is to analyse the terms, conditions, and clauses of the lease agreement to ensure they are fair, reasonable, and protect the interests of the party requesting the review, typically the tenant.

Why should you use a lawyer to conduct a commercial lease review?

It’s really not a good idea to sign a lease agreement or spend money renovating or fitting out a premises without seeking legal advice.  You may end up being bound by lease terms which are not favourable or be required to vacate after you’ve already spent money on a renovation or fit out. A legal professional can provide guidance and advice, highlighting areas of concern and suggesting amendments or negotiation points to address these issues.

Easy guide to a commercial leasing process

The commercial leasing process involves searching for a suitable commercial property, negotiating lease terms with the landlord, drafting a lease agreement, and executing the contract.

So, when does a lease review happen? You would typically engage legal services after the lease agreement is drafted but before signing.

During this review, a legal professional specialising in commercial leasing examines the lease terms, conditions, and clauses to ensure they are fair, reasonable, and protect your interests.

Is there a difference between a commercial lease and a retail lease?

A commercial lease and a retail lease are both types of lease agreements, but they have some key differences in terms of the type of property and the intended use.

Here are some key elements:

Commercial lease  – a commercial lease can encompass a wide range of properties, including offices, warehouses, industrial facilities, and mixed-use buildings. It covers spaces that are used for various commercial purposes, not limited to retail.

Commercial leases often involve businesses that provide services or engage in activities other than direct retail sales. Tenants can include professional firms, technology companies, manufacturing operations, and more.

The usage and layout of a commercial space can vary significantly depending on the tenant’s requirements. For example, an office space may require open floor plans, private offices, conference rooms, and IT infrastructure, while an industrial space may require specific equipment, loading docks, or specialised zoning permits.

Retail lease – a retail lease specifically applies to properties that are intended for retail activities, such as storefronts, shopping centres, malls, or individual retail spaces within mixed-use developments.

Retail leases might have different lease terms compared to commercial leases and will have specific clauses as required by the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).

What is included in a commercial lease legal review?

Here are some common commercial lease terms our leasing lawyers will review:

  1. Description of the Premises – we carefully review the description of the premises to ensure it adequately reflects the space being leased.
  2. Commencement Date and Lease Term – we will review that the dates align with your expectations, and any negotiated renewal or extension options.
  3. Rent – we will review the provisions related to rent, including the amount, frequency of payment, and any rent reviews over time.
  4. Security – if the lease requires you to provide a security deposit or other form of security, our lawyers will review the terms governing its use, return, and potential deductions and consider if they are reasonable.
  5. Outgoings – we will examine the lease to determine your obligations regarding outgoings, such as insurance, utilities, and maintenance costs – and we will advise you if these obligations are clearly defined and reasonably allocated between the landlord and you as the tenant.
  6. Repairs and Maintenance – we will review the provisions related to repairs and maintenance to ascertain the responsibilities of both sides, and consider if the obligations are reasonable and clearly stated, including any provisions for reimbursement or indemnification.
  7. Termination – we  will examine the termination provisions, including the rights and obligations of both parties in the event of early termination or non-renewal of the lease – our lawyers will consider if the termination terms are reasonable.

Benefits of having a commercial lease reviewed by a lawyer

Why is it better than you just reviewing it yourself?

  • Legal Expertise

A lawyer specialising in commercial leasing has the legal knowledge and expertise to identify potential risks and legal issues in the lease agreement that may not be apparent to someone without legal training.

  • Protection of Interests

A lawyer can ensure that your interests as a tenant are protected by reviewing the lease terms and suggesting necessary amendments.

  • Compliance and Legal Requirements

A lawyer can ensure that the lease agreement complies with relevant laws and regulations, helping you avoid any legal pitfalls or non-compliance issues.

  • Negotiation Power

With the assistance of a lawyer, you gain a stronger position during lease negotiations. They can advocate on your behalf, negotiate more favourable terms, and help you achieve a more balanced agreement.

  • Clarity and Understanding

Lease agreements can be complex and contain legal jargon, therefore a lawyer can provide clarity and help you understand the implications of various clauses, ensuring that you are fully aware of your rights and obligations under the lease.

  • Customisation and Tailoring

A lawyer can assist in customising the lease agreement to meet your specific business needs and objectives. They can draft additional provisions or modify existing ones to better align with your requirements.

  • Peace of Mind

Having a lawyer review the commercial lease provides peace of mind, knowing that a legal professional has thoroughly examined the agreement and ensured that your rights and interests are adequately protected.

We are Perth’s Experienced Commercial Lease Lawyers

Our experienced commercial leasing lawyer regularly prepares and examines leases for commercial landlords and tenants. Our experience in commercial leases, industrial leases and retail shop leases helps you get the best result for needs. Contact us for an obligation free quote and a complimentary 15-minute initial telephone consult.

Phone: (08) 9321 9395


Disclaimer: the content of this article is provided as general information only and does not constitute legal or other advice on any specific matter and should not be relied upon as such. If you are seeking or require legal advice, please contact our lawyers.