Abiodun Doherty
When leasing a property it is always advantageous to approach
the issue in a structured way. There are different items that you
need to consider, depending on whether or not it is a commercial
property. The initial terms in most leases of commercial properties
range from three to five years.
While this gives you security, regarding the term of the lease,
it also means that if you enter into a bad agreement or lease the
wrong property, you might find it difficult to get out of the
transaction for some years. It is advisable to consider the lease
before you sign.
It is important you ensure that you are dealing with the right
person who has the authority to make the lease.
If it is a sublease, it might be prudent to request for a copy
of the initial lease to be sure that the person leasing has the
right to do so and you are not paying for more than the term
remaining on the lease.
While this might seem basic, many have been burnt by failing to
consider this in the light of the general rule that a person cannot
give what he or she does not have the authority to give.
Once you have the assurance that you are dealing with the right
person, you can proceed to schedule an inspection of the property.
Real estate agents and valuers manage many commercial properties,
which makes it more assuring to engage them as professionals who
have a brand name to protect. During your preliminary inspection,
you should take note of critical issues such as parking, water,
garbage collection, general security of the building, among
others.
While carrying out the inspection, make sure that you ask about
the person responsible for the repairs of damaged parts of the
property. Most property leases are done on a “as it is” basis, but
if you specifically point out property damages and other concerns,
you are likely to receive the assurances of the landlord to repair
such damages. This is also a good time for you to confirm if you
could alter the property to your taste and the process for securing
the property owner’s approval. Depending on the nature of the
repairs, you might be able to get a rent discount for a certain
period.
During your period of inspecting the property, do take out time
to look beyond the building into its environment. Ask the agent or
owner for details on the general attitude of the neighbours and the
neighbourhood. Is it a neat and decent environment that will
attract quality people to your business? The garbage collection
practices of that area should be looked upon. Are there smell or
noise challenges? Does the building have adequate parking onsite
and around it? Are you comfortable with the nature of businesses in
the area? Sources of unusual noise or smell should be discreetly
investigated.
In some instances, some properties cannot be altered without
government approval. You must be very careful in assuming that
because a property is in an area that is turning commercial that
all the properties there were approved for commercial usage. If the
property is zoned for residential purposes, it might pose a problem
if you intend to change the use to commercial. In most places, the
change of use process is time consuming and costly. This could lead
to cost overruns and delays in construction timeline.
In addition to the above issues, you should read the lease
carefully or better still, get a legal practitioner to read the
lease agreement. There are a couple of tripping points in some
lease agreements that an observant reader should be cautious. Be
sure that the commencement date reflects the period that you are in
possession of the property, and not the period when the owner is
still carrying out renovations and repairs. If your lease commences
before you gain full access or use of the property, you are losing
money because you have paid for an unused term.
It is noteworthy that the right to sublet is not automatic. It
should be clearly spelt out in the agreement. After the expiration
of the initial term, there should be an option for you to renew the
agreement and it is possible to lock in a fixed rental increase. If
the option to renew is absent and the other party refuses to
incorporate it, this might be a huge risk that you are taking by
proceeding to renovate and refurbish the property. Furthermore, an
arbitration clause should be included to enable the parties, in
case of any dispute that might arise, to resolve as soon as
possible.
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