5. WHO WILL BE THE TENANT?
- Before submitting an Offer to Lease, obtain advice from your Lawyer and Accountant as to the legal entity to lease the premises. The Tenant may be a person, a company, a trust etc.
- Business structuring will ensure that the most effective tax planning arrangements are used.
- Asset protection strategies mean that the Tenant should not own assets of value which might be attacked where the Tenant encounters financial difficulties or is involved in a dispute.
6. WHO WILL BE THE GUARANTOR?
- Where the tenant is not a person (excluding public companies) the Landlord will usually require a personal guarantee from the directors of the company or the people behind a trust.
- Discuss with your Accountant whether it is necessary that all of the Guarantors should remain as directors or individuals behind the trust, and therefore remain liable for the Tenant’s obligations.
- Having determined who shall remain as a legally exposed person, examine what assets are owned by those persons, as those assets are exposed to attack. A decision must then be made as to whether any changes should be made to the ownership of those assets.
7. BUILDING INSPECTION REPORT – ENGINEERING REPORT
- Obtain a comprehensive building inspection report or engineering report of the building from structural or civil engineers to confirm the structural soundness and general condition of the property.
- Where the report is not completed prior to signing the lease, the lease should contain a special condition for obtaining a satisfactory report within a specified time.
- A report would assist you to determine whether the premises are adequate and suitable for your needs, and the likely future repair and maintenance expenses.
8. FITOUT OF THE PREMISES
- Where the Landlord agrees to pay for the cost of the fitout or to undertake the fitout, ensure that details of the work is contained in the Lease document.
- To avoid disputes at the end of the Lease, ownership of the fitout needs to be clearly provided in the lease:
- Where the Landlord retains ownership, the Tenant is not entitled to remove any of the fitout at the end of the Lease
- Where the Tenant retains ownership, the Landlord may require the Tenant to remove the fitout and restore the premises to its original condition prior to the fitout being constructed