

One of the biggest steps in running a business is securing a commercial lease and negotiating its terms with the landlord or landlord’s lawyer. But contrary to popular belief, there is no such thing as a ‘standard’ commercial leasing agreement.
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Those who become too emotionally attached to a particular premises and then accept a prospective landlord’s first offer are going to do themselves and their business a disservice. Any agreement you make will affect much more than just your bottom line so it’s crucial you make informed and impartial decisions.
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Terms That Are Typically Negotiable
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Ideally, you’ll want to pay close attention to such talking points as: rent payment schedules, if/when potential rent increases will take effect, the length (or Term) of the lease agreement, your responsibilities for upkeep and/or maintenance, and what provisions for subleasing are place, if any.
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These are just a few of the terms that may come up in your negotiations with the landlord and you should put time aside to evaluate your circumstances and plan your budget accordingly.
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Drawing Your Lines in the Sand
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Naturally, a commercial lease is written to favour the drafting party. And while this does put you in a less-than-advantageous position, a potential tenant is never without some leverage when entering into negotiations.
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You are talking about exchanging large sums of money for the right to conduct your business from a central location after all.
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Firstly, identify your broader leasing requirements and group them into those that:
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• Are essential to the success of your business undertaking
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• Are desirable and would be beneficial to have moving forward
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• You are willing to compromise on as they are non-essential
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• Have a negligible effect or no effect at all on your business
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Navigating these talks may require a bit of back and forth and compromise from both parties before an agreement can be reached. During this time a number of changes will be introduced with some points being hard-won and others not so much. This will go on until you’re both happy and agree to the terms in writing or one or both parties walk away.
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Getting a Second, Legal Opinion
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If you do choose to sign, you will have made a formal business transaction and entered into a legally binding contract. While you can certainly take a DIY approach to negotiating a commercial lease, it is highly recommended that you seek out professional legal advice from a trusted source.
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This is one of the best ways to ensure you don’t make some easy-to-avoid mistakes and that the lease will be an asset to your business instead of a liability.
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If you have any questions about a commercial lease or sales agreement that has been extended to you, contact David Lewis, commercial lawyer and Partner at LBH on dlewis@lbandh.com.au