At first glance, the relevance of an article about property leasing to transport operators may not be obvious. Well, your fleet has to reside somewhere and it’s likely you will need to lease premises for this purpose.
Entering into a lease will involve ongoing legal and financial obligations that can last for years.
Our experience suggests the following reasons why it pays to seek legal advice before you commit:
- Once you have signed a Heads of Agreement, you will find that the landlord, its lawyer and the agent will resolutely refuse to depart from the commercial terms – you are locked in. Get advice before you sign the Heads of Agreement.
- You sign a Heads of Agreement and enter into the lease, only to find you require a planning permit to use the premises as intended. The planning permit is rejected. Council requires you to cease use. You are stuck with a useless lease but compelled to pay the rent for years. So, you also need to get planning advice before you commit.
- You fail to cap rent increases, you agree to higher than market rate increases or you fail to negotiate the right to institute market reviews. The devil is in the detail.
- You fail to assess the outgoings and find out after you are committed that there are substantial owners’ corporation fees. You’ll be paying these for years.
- You agree to an ‘estimated’ per square metre figure for outgoings only to find that the actual figure is significantly increased. The landlord argues it was only ever an ‘estimate’. The estimate should have been capped but the horse has bolted.
- You fail to conduct adequate due diligence and don’t notice onerous and unusual owners’ corporation rules or building rules that adversely affect your use of the premises, e.g. hours of operation.
- Inadequate attention is given at the negotiation stage to matters such as building services including air-conditioning, heating, access, car parking and essential safety measures.
- Your access to the premises is delayed because you have not provided the bank guarantee and insurances, meaning your lead time for fit out works blows out.
- You find yourself stuck with unusually onerous and expensive make good obligations in the lease. Not a worry now, but in 5 or 10 years, the costs could be enormous.
- You agree in the lease that the landlord can waive the make good requirements and instead require you to make a payment in lieu of make good. The reality is the landlord will require you to make a grossly inflated payment. It will carry out minimal make good works and use your money as an incentive for the next tenant.
- You fail to prepare a condition report at the start of the lease resulting (at the end of the lease) in a costly dispute about the condition of the premises.
Some investment in proper advice at the outset is money well spent.
Our experienced staff are a phone call away.