Most businesses don’t own the premises they work from, but lease them. A property lease is much cheaper than an outright purchase and you have the option of not renewing it when the time comes if you think your business could do better in a different area. It is important to consult property lawyers before signing the lease, especially if you don’t know much about them.
Here are some lease issues to consider before you sign on the dotted line.
- Make sure the term of the lease is long enough for you to recoup the investment and make a profit. Landlords are under no legal requirement to renew the lease. Plus, when they do renew they have the right to increase the cost.
- Ensure that your lease gives you the option to renew if you want to. A lot of time and effort is involved in moving everything to another location. Besides, the goodwill you have established may be attached to the location and you’ll lose it if you move.
- A minimum tenancy of 5 years is provided for in many commercial leases. If it is not, you have the statutory option to renew, but the landlord must be advised of this at least 30 days before the lease is due to end. It must be written onto a form called Notice of Exercise of Option.
All the legal work done in buying or selling property is called conveyancing. It is usually done by a conveyancing company or commercial lawyers, both of whom are fully trained and experienced in such matters. Of the two, the solicitor can give you better legal advice than a conveyancing company. However, if you are a detail oriented person, you may be able to do the conveyancing yourself. The only thing is you can be liable for the loss if something goes wrong with the sale.
Conveyancing company and commercial lawyers take out professional indemnity insurance to cover them for the possibility of loss. You can also do this, but it is unlikely that you would be able to take out the same amount of insurance as a professional person. And by the time you pay for this and all the other costs involved, you don’t really save much.
There is quite a lot of work involved in doing conveyancing and when you are not experienced or trained it will take you longer to get through it, especially if you are also working at another job. Here are some of the steps a conveyancing company needs to take to get the job done.
- Examine the sale contract
- Arrange for pest and building inspections
- If the property is in a strata scheme, the strata inspection report will have to be examined
- Arrange the finance
- Exchange the contract of sale
- Pay the deposit