2017 has been a mixed year for commercial leasing. Notwithstanding that, there are great opportunities for landlords and tenants alike to achieve certainty and clarity with their commercial leasing arrangements by renegotiation and clear documentation.
If you are a landlord, consider the following:
- regain control of arrears by proactively recovering your rent and outgoings. Clearly document a payment plan by Deed for the tenant and guarantors to adhere to. If possible, obtain additional security for the outstanding debt;
recalibrate your expectations having regard to economic factors. If incentives are offered, confine the benefit of incentives to the current tenant only. That way, you are not stuck with incentives that you would not have offered to an assignee;
if your space is leased for retail purposes, check that you are complying with the terms of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).
If you are a tenant:
before signing the Letter of Offer to Lease prepared by the leasing agent, have a lawyer review the Offer to Lease, Agreement to Lease and draft Lease. An Offer to Lease could at times, create a binding obligation that you cannot get out of without incurring a substantial cost. Further, it is much harder to negotiate variations or additions to the terms of the Lease once it has been drafted based on a signed Offer to Lease;
if the market has moved significantly since you entered into the Lease, take steps to renegotiate your lease terms with the landlord and have the variation documented in a Deed of Variation of Lease, otherwise the changes may not be legally enforceable;
if your business is in retail, check the protection afforded to you by the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA).