Do you know what is to happen at the end of your commercial lease?

By Pamela Wardle, Legal Practitioner Director

Negotiating a lease often represents a new business or venture and can be a very exciting time.  At this stage, the parties often focus on issues which will apply immediately such as the rent payable, how it is payable and whether or not the rent includes GST, which charges are covered in outgoings and what proportion is payable by the Lessee and what is the term of the lease. 

When negotiating the lease it is equally important to consider the terms which relate to the end of the lease, for example:

1.       In what condition are the premises to be left when the Lessee leaves?  For example, is the Lessee to remove all fixtures and make good any repair, essentially leaving an empty shell?  If not, what is to remain and in what condition?  What types of costs must the Lessee pay if he or she does not comply with the terms of the Lease and how can the Lessor recover these costs? 

2.       What are the Lessor’s rights if the Lessee owes money at the end of the Lease?  Can the Lessor recover those costs as a liquidated debt or are there specific steps the Lessor must follow before recouping those costs?

3.       Who pays any legal costs associated with ending the lease?  For example, if the lease is registered does the Lessee pay the costs of surrendering the Lease from the title?

It is important to consider these issues and others which may arise at the end of a lease to assist all parties to end the lease on good terms.