Landlords: Watch This Before You Hand Over the Keys
If you’re leasing out a commercial property, what happens when the tenant needs access before the lease officially begins?
There may be fit-out works to complete, planning permits to obtain or other conditions that need to be met first.
That’s where an agreement for lease can become important, and there are a number of things landlords should have in place before allowing works to begin.
In this short video, Ross explains what an agreement for lease does and some of the key things to consider before handing over access.
If you’re preparing to lease a commercial property, this is worth knowing.
Working with you,
Ross Millen & The Millens Team
Ross Millen:
Hi. Sometimes things happen in twos or threes. So what we've noticed in the last couple of weeks is we've had a couple of agreements for lease with leases attached. Now, why do you use an agreement for lease? Well, it may be that the premises, maybe the lease is going to start in a few months time, and maybe you, the landlord, have to carry out some works to the property, or the tenant wants to come in and do their fit out. Or perhaps the tenant has to get a planning permit for what they want to use the property for. And so they don't want, actually, for the lease to start yet, but they want to enter into an agreement so they've got a binding contract that says that, as long as A, B, and C happens, then the lease will come into place. So sometimes the agreement for lease can be conditional on those things. So having conditions precedent, like getting a planning permit or a license to do something.
And sometimes the agreement for lease is not conditional at all. It just says that, after the works are done, then the lease will start. So it's important to make sure there's a comprehensive list of landlord's works, if there's any, and a comprehensive list of tenant's works. And you want to get your building consultant involved. And you want to make sure that before you allow the tenant to come in and start doing any works, that you've got your bank guarantee or your personal guarantees in place, that maybe the lease is signed and being held by us in escrow, just holding it ready until all those conditions are met. So it can be quite complicated and we often see agreements for lease for larger properties with higher rents. So remember, if you're entering into any leasing arrangements, leasing agreements, and you need help drafting an agreement for lease, contact me, Ross Millen, or anyone else here at the Millens team.
We're here to help you with your agreements for lease and your leasing problems. Thanks.