Commercial Lease Agreements

Like with any other legal agreement, a valid Commercial Lease Agreement is extremely important, as it legally binds both the Landlord and Tenant, defining their rights and obligations, protecting the financial interests of both parties and ensuring a clear understanding of the Lease Agreement.

Here are some more reasons as to why a valid Commercial Lease Agreement is so important:

• Legal protection – ensures both parties understand their rights and obligations, preventing disputes.
• Financial security – by specifying the rental amount, deposits and late penalty fees.
• Property protection – it states how the property must be maintained and who is responsible for what.
• Clear terms – it sets out the duration of lease and renewal options.
• Evidence in court – the lease agreement will be utilised as evidence should any legal matters reach the court.
• Peace of mind – a well drafted, correct Lease Agreement provides both parties with peace of mind.

Below are the key elements of a valid Commercial Lease Agreement:

• Parties: Both the Landlord and the Tenant, must be clearly stipulated in the Lease Agreement, this must be done by using their legal names and / or business names.
• Property description: The exact address, including a unit / factory / office number of the leased premises is to be clearly defined.
• Lease Term: the commencement and termination dates of the lease agreement are to be stipulated, as well as the option for renewal.
• Rent and additional costs: The monthly rental amount, as well as any other charges that are applicable to be outlined, including provision for a rental increase.
• Security deposit: The deposit amount required is to be stated in the Lease Agreement, as well as what it will be utilized for and when the Tenant can expect his deposit refunded to him, upon vacating the premises.
• Maintenance: It must be clearly set out which party is responsible for what maintenance.
• Use of premises: Clearly state what activities are permitted to be done on the premises and if there are any restrictions.
• Termination: There needs to be a termination clause which allows either party to give notice and should there be a breach of the agreement, what the consequences would be.
• Destruction or damage: Outline what would happen if the property is damaged or destroyed, at no fault of the Tenant.
• Exclusions: Any exclusions to be set out.
• Insurance: Specify the insurance requirements.
• Signatures: Both parties to sign the agreement and the date to be completed.

Both Landlords and Tenants, take the time to read your Lease Agreements, ensuring that all relevant information is contained in the agreement and ensure that you understand the contents.  Don’t be caught out with the fine print.