Lease Document Packages
As the owner of a commercial property, the starting point is having a comprehensive lease agreement.
We offer premium Commercial Lease packages.
Queensland does not have a standard Commercial Lease. The REIQ does have a Commercial Tenancy Agreement which may be suitable for some short term commercial tenancies. However, where you require greater certainty and/or more issues covered, a formal commercial Lease document capable of registration is recommended, particularly where the lease term is more than 3 years.
As the lease of your commercial premises may operate for many years, it is essential that the Lease document contains all the terms and conditions that you need.
Key clauses include the rent review clauses, the end of lease obligations of the tenant, the Bank Guarantee or Rental Bond, and personal guarantees where applicable.
Essentials in a Commercial Lease
Below are some of the basic aspects of a lease agreement for Queensland commercial property which the landlord and tenant should consider:
1. Property address
The address of the premises needs to be clearly described. Whilst an obvious point, time can be wasted clarifying a property’s legal description where a Lease is to be registered and/or where a lender is involved.
2. Term of the Lease
The commencement date and the length of the term of the lease needs to be stated.
3. Options
Any options to renew the lease for an additional term or terms must be specified. It is vital for a Lessee to have option periods to ensure it has security of tenure when attempting to sell the business conducted on the premises. The lease must clearly state how a decision to renew must be made and conveyed to the Lessor within a defined period of time before the end of the lease.
4. Rent
The rent for the first year of the term must be clearly stated, as well as how the rent be calculated after the first year. Often, the rent will increase in accordance with the increase in the Brisbane (All Groups) Consumer Price Index. Where the option to renew is exercised, the rent for the first year of the new term will usually be the then market rental and thereafter the rental will be increased annually in the manner specified.
5. Goods & Services Tax
Goods and Services Tax is payable by the Lessee in addition to the rent and a tax invoice should be provided to the Lessee.
6. Outgoings – operating expenses
The Lease must specify how Outgoings/operating expenses are recovered by the Landlord. These costs will either be included in the rent or recovered as an additional amount payable by the lessee. These may be estimated for the Lease year and invoiced monthly, with an appropriate adjustment when the actual amount of outgoings is known.
7. Utilities – Services
The Lease will state whether the Lessee is to pay the cost of utilities/services consumed on the premises.
8. Guarantee
The Lease will state whether the lessee must provide the Lessor with a bank guarantee or cash for the bond.
9. Assignment or sub-letting
The Lease allows the Lessee to assign or sublet with the Lessor’s consent, which cannot be unreasonably withheld. Provided that the new Lessee is clearly able to perform the lease and meet their obligations and the Lessee is not in default under the Lease, the Lessor cannot refuse the assignment or subletting.
10. Signage
The Lease will usually provide that all signage requires the Lessor’s consent. As adequate signage may be a significant component of the success of the lessee’s enterprise, the issue should be discussed and agreed before the lease is signed.
11. Insurance
The insurances required by the Lessee will be set out in the lease.
12. Repairs & Maintenance
Repairs and maintenance are the responsibility of the Lessee however any work that may be required of a structural nature is the Lessor’s responsibility. This issue can be a matter of dispute where there is a disagreement as to the nature of the defect.
13. Use of the premises
Whilst the permitted use of the premises by the Lessee will be stated, it is for the Lessee to ensure that their use complies with Council’s requirements. Where there are any doubts whether the use is permissible, the issue should be investigated before any lease is signed. Where the premises are part of a Centre/Complex with multiple tenancies, a lessee may want an exclusive right to the permitted use within the complex.
14. Relocation
The lease may contain a clause entitling the Lessor to relocate the Lessee to other premises within the Centre/Complex.
15. Demolition – redevelopment
The lease may contain a clause entitling the Lessor to end the lease if the Lessor decides to demolish/redevelop the premises.
16. Default by Tenant
Default by the Lessee has two potential outcomes:
- If the default relates to significant issues such as payment of rent or the use to which the premises are put, then default entitles the Lessor to take back possession of the premises, relet them, and recover the loss from the Lessee.
- If the default were of a minor nature then the Lessee would get relief from forfeiture leaving the lessor with a right to recover damages.
17. Carparking
The Car parking available to the Lessee (and its customers) may be stated in the Lease. This can be a very important issue for some lessees as it can having have a significant impact upon he success of the business.
18. Personal Guarantees
Where the Lessee is a company or trust, the Lease will usually contain personal guarantees where the director or trustees (where individuals) personally guarantee the performance of the Lessee’s obligations.
19. Refurbishment by Tenant
Some leases require the tenant to undertake a refurbishment of the premises after a specified period of time, and/or upon the termination of the lease; at the cost of the tenant.
Leasing Costs
The costs payable by Tenants may include titles office registration fees, mortgage consent fees, survey fees, and sketch plan fees. There is no stamp duty payable on a Lease.
After confirming your leasing requirements, we can inform you as to the costs involved in arranging your lease. Legal costs for preparing a retail shop lease are paid by the landlord. In all other cases they are paid by the tenant.