Business premises are a critical feature of the future of any new business. People sometimes forget though that it isn’t all about securing the right location – the terms of the lease of your business premises can be just as important as the location (and can haunt you for a long time if you aren’t careful from the outset).
There are many things that need to be considered before you sign a lease, some of which include:
1. YOU DON’T HAVE TO SIGN THE LEASE IMMEDIATELY (IN FACT, SOMETIMES YOU CAN’T)
When the Retail Shop Leases Act 1994 (Qld) applies to your lease, you are entitled to a seven day disclosure period after you receive a copy of the draft Lease and the Lessor’s Disclosure Statement.
The purpose of the disclosure period is to give you time to review the Lease carefully and obtain legal and accounting advice in respect to your obligations. If you sign the Lease before the disclosure period expires, you will be entitled to terminate the Lease at any time during the first six months after you enter into it so it is in the interest of both parties to use the disclosure period properly.
2. YOU DON’T HAVE TO ACCEPT ALL OF THE LANDLORD’S TERMS
It is important to that you review the terms of your Lease carefully to make sure that they reflect the terms you have negotiated with your Lessor. If something has not been included, or you are not satisfied with a term, you should request the Lease be amended before you sign it. Lessors are generally open to amending their lease documents where the request is reasonable or necessary to reflect the terms you have negotiated.
3. YOU NEED TO THINK ABOUT THE FUTURE
You should consider the future operation of the business not just your “right now” needs. For example, does your lease need the flexibility of option terms? When you start your business, it may feel like option terms are so far away you can ask for them later if everything is going well. However, if your premises are critical to your business you need to be thinking about how a change of location in the future can affect your business. While option terms do not have to be exercised, having them in your lease from the outset means that you avoid a battle with your landlord down the track.
The above are simply three of many things that need to be considered before signing a Lease. It is important to make sure the terms of your Lease are correct and properly protect your interests. Our commercial law team can assist you in the review of your lease and the drafting of any amendments you require. For any queries, please contact our Cairns office on 07 4052 0700.