A retail or commercial lease is a legally binding contract between a landlord and a tenant of a retail shop that allows the tenant to use the landlord’s property in return for rental payments. The process of renewing or terminating your lease depends on your agreement with your landlord and you actually may not have the right to renew your commercial lease.
Renewing with an option
When you have a lease option in your contract, you can renew the lease on the same terms as the original. Note the deadline date for exercising your option to avoid losing it. If your contract says the rent shall be adjusted according to market rent you have the opportunity to share the cost with your landlord if you appoint an independent valuer to determine this price. You must be aware that a market rent valuation overrides the timeframe for exercising your options, which is why you must reply within 21 days of the market determination.
No option alternatives
Your landlord is not obliged to renew the lease if you do not have an lease option in your contract. Your landlord should write to you six months prior to tell you their intentions. At the expiry of the lease, you may stay in your property on a month-to-month basis if the landlord agrees. In this holding over period, the same legal obligations of the lease apply, and the landlord may terminate the lease with a written notice of 30 days.
Make good requirements
When your lease is terminated, and your business must vacate the premises, the make good provisions in the lease will require you to leave the property in the same condition. Clarify with your landlord on the standards of the make good provision to avoid a bond dispute.
A lease option is a great idea for many business owners and landlords alike, so remember to negotiate an option to renew in your lease contract if you’d like long-term security in the one location.