Contract Details For Commercial Property Transactions

A property, be it residential or commercial, is rented or leased based on a legally binding contract

. It is signed between the occupier or the tenant and the owner or the landlord. Violation of the contract terms by either of the parties can have legal repercussions. Renting out of commercial property in UK is also governed by the Lease Code. However, the tenant should not take it for granted that the landlord would ensure complete compliance with the Code. At times, the landlord may not be the actual owner of the property and may be a tenant himself. This may also limit the flexibility of the terms that the landlord offers. As a tenant, you need to examine a few points concerning lease negotiations before taking the final step.

You can expect that the landlord makes the terms of the contract absolutely clear. You need to understand the total duration and extent of the cost and thus the liability that you would be taking on when you sign a lease depending on the terms offered by the owner of the property. The following few tips can help you out in this regard.

You need to make sure that you completely understand each and every clause and condition mentioned in the agreement along with the total cost incurred till the expiry of the lease. You can even ask the property owner or the representative of the property owner to confirm the same in writing and check whether it complies with the Lease Code.

You need to check the fact that the agreement clearly states the property extent along with the boundaries marked on it. This should also include details about the floor area, access ways and mention of the area that are to be shared with the other occupiers, any kind of restrictions, any obligations or planning limitations that might be associated with the property.

The contract should clearly state the details about the landlord along with any other superior landlord of the property. You also need to take into account the possibility that somebody else might claim ownership of the property.

You can also request for written responses from the landlord. Check every bit of information that might appear important to you and relevant for business. These need to be mentioned clearly in the Heads of Terms and thus documented in the lease agreement.

A checklist might be of great help so that you can procure the information that you have been looking for.

The deposit amount is certainly a substantial amount and you need to ensure that a fair rate of interest is accrued. You can insist on depositing the money in a stakeholder or escrow account. It is necessary that you regularly obtain statements from the landlord in order to ensure that the money is still in the account and the interest earned from it paid to you. In case the property is transferred from one owner to the other, ensure that the new landlord gets the money that has already been paid as the deposit.

The contract should also state the time when you can get the deposit amount back. This also holds true for commercial premises rented out for various industries, including the marine industry in UK.

by: Steven Hayes

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