Monday, 25 January 2016

Beginner’s guide to buying a commercial property for investment - Part 5: Lease agreements, permissible activities and use of common areas

Beginner’s guide to buying a commercial property for investment - Part 5: Lease agreements, permissible activities and use of common areas

Commercial property lease agreements
A commercial property lease agreement is the key document where all of the conditions and responsibilities are set out. Cease agreements for commercial real estate are not usually standard templated documents and can be lengthy and complex. Typically a solicitor will be engaged by the owner to draw up the lease agreement according to their specifications. A good solicitor with experience in commercial property lease agreements will be invaluable. However, do not just rely on your solicitor, you should also read the lease agreement to ensure that you know the conditions of the lease. If you do not understand any of it you can ask your solicitor to explain it to you.

Some things to consider in the lease agreement include:

Permissible activities
You may not want certain types of activities to be carried out on your commercial property this may be because they are not allowed by the zoning or body corporate in a strata title property or it may just because some types of activities due to their noise or other reasons are undesirable and may decrease the value of the property or cause issues with neighbouring properties / businesses. Tenants may want to have exclusivity for their business type to avoid further leases to their competitors which could decrease their business. By limiting the activities it can allow a broader range of potential other tenant types.

Use of common areas

Where multiple tenants use a property and there are common areas the activities allowed in these areas should be clearly specified. If not specified some tenants may use the common areas for storage or other activities that could block access or have other undesirable consequences.

Find the full guide here: Commercial property investment (Beginers guide).

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Oak Laurel have specialist commercial property finance broker that can help you compare commercial property finance rates. Furthermore, our specialists can make comparing the different loans and obtaining the right loan for your commercial property simple and easy. We can even help you to get commercial property loans at 80% LVR (loan to value ratios) in some cases. Contact Oak Laurel to find out more about commercial property finance.

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