What to look out for in a commercial property lease

Devon commercial property solicitor, Nick Arthur, looks at the terms that are often found in a commercial property lease.

A commercial lease is made between the landlord and the tenant of business premises. The lease will set out the rights and obligations of both parties; known as the lessor (the landlord) and the lessee (the tenant). In some cases, a guarantor may also be party to the lease, becoming legally responsible to repay to the landlord any losses if the tenant is unable to pay the rent or breaches the lease.

Here are some of the terms commonly included in a commercial property lease:

  • Lease duration:

The duration of the tenancy, including the start and end dates.

  • Rent:

The amount of rent that is payable and how the rent is calculated (for instance per square foot).

  • Payment terms:

Provisions specifying when and how the rent is due.

  • Escalation clauses:

Provisions for rent increases over time. This is often tied to inflation or market rates.

  • Maintenance responsibilities:

Provisions identifying who is responsible for repairs, maintenance, and utilities.

  • Permitted use:

This defines how the property can be used and the type of business that can be carried out at the premises, along with any restrictions or limitations on that use.

  • Subletting and assignment:

Restrictions and conditions on subletting or transferring the lease to another party.

  • Security deposit:

This will specify how much the security and damage deposit will be and the conditions for its return at the end of the lease term.

  • Insurance requirements:

Specifications for the types of insurance tenants must have, and the extent of the cover.

  • Termination conditions:

The basis upon which either party can terminate the lease early, before the agreed end date. There may also be a break clause.

  • Renewal options:

Terms for extending the lease beyond its initial term.

  • Alterations and improvements:

The terms upon which changes can be made to the property and who will be responsible for associated costs.

  • Default provisions:

Consequences for failing to meet lease obligations, including eviction procedures.

  • Indemnification:

Agreement to hold harmless against certain liabilities, damages, or claims.

  • Legal compliance:

Assurance that the property complies with all relevant laws and regulations.

The terms of a commercial lease should be carefully negotiated and reviewed to ensure they meet the needs of both parties and protect their interests. It’s advisable to seek legal advice from an experienced commercial property solicitor when drafting or reviewing a commercial property lease.

We deal with commercial property from our offices in Devon and Somerset, representing landlords and tenants throughout the south west and beyond.

Contact us for a fixed fee quote so you can budget for your legal costs from the outset.  Call 0333 888 0404 or send an email to us at [email protected].

Nick Arthur

Nick Arthur

Nick Arthur is the hugely experienced head of Slee Blackwell's commercial team. His expertise includes dealing with company share acquisitions and disposals, partnerships and site assembly. Nick, who has a particular interest in the leisure and hospitality industry, has been involved in multi-million pound deals in both the corporate and the property sectors.
Nick Arthur

Nick Arthur

Nick Arthur is the hugely experienced head of Slee Blackwell's commercial team. His expertise includes dealing with company share acquisitions and disposals, partnerships and site assembly. Nick, who has a particular interest in the leisure and hospitality industry, has been involved in multi-million pound deals in both the corporate and the property sectors.

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