Commercial Leases - Essential Questions for a Prospective Tenant

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Commercial Leases - Essential Questions for a Prospective TenantA commercial lease can be an extremely onerous contract and expert legal advice is essential from the negotiation stage through to the point of signing the original lease and related documents.

We have highlighted below in the form of strategic questions some of the major issues upon which we advise our commercial clients.  These issues are of course of equal and reciprocal importance to a landlord or tenant property developer. 

Consider the following:-

1. Which company within your corporate group will be the tenant and assume liability to pay rent and perform the covenants? 

2. Do your company’s accounts show sufficient balance sheet strength to satisfy a landlord/property developer as to your company’s suitability/acceptability as a tenant? 

3. Will you have to provide a personal guarantee?  If so, what steps can you take to protect or limit your personal exposure?

4. Will a security deposit be required and, if so, on what terms? 

5. Have you double checked the measurements of the space to be leased to your company? 

6. What is the proposed term of lease?  Will the tenant be entitled to “break” the lease at any time during the term and, if so, upon what conditions?

7. Will the tenant be required to contract out of statutory lease renewal rights?  If so, what would be the consequences for your business?

8. How much per square foot/square metre is the property worth?

9. What are the VAT consequences for your company of entering into a commercial lease?

10. Will the tenant be entitled to a rent free period and, if so, for how long?

11. Wil the landlord or the tenant carry out any fit-out works and, if so, what works and who pays? 

12. If there is a fit-out, how are the costs to be reflected on rent reviews? 

13. What are the landlord’s requirements regarding a fit-out specification?

14. How often will there be rent reviews and upon what terms? 

15. What would be the tenant’s liability for rates, insurance and service charge? 

16. What would be the tenant’s liability for repairs, i.e. internal only or full repairing and insuring? 

17. If the building is an “old” building, what should a tenant look out for as regards the repair and other covenants? 

18. Is the planning permission in order?

19. Is the fire safety and other compliance certification in order?

20. Will the tenant be permitted to sub-let, sign all or any part of the property?

21. Do the telecoms, broadband and other communications facilities serving the building satisfy the requirements of your business?

22. Will an Agreement for Lease be required? 

23. What costs will your company incur in entering into the transaction, e.g. fit-out, project management of fit-out, security deposit, rent, legal fees and other outlays, stamp duty, etc.?

24. How time sensitive is relocation for your business and can you protect your business by careful drafting of an agreement for lease? 

All of the above points (and more) require careful advice and consideration so as to avoid potential financial exposure for your business and your directors and shareholders after a lease has been signed when it would be too late to change anything. 


For more information, contact Sharon Scally of Amorys Solicitors, Suite 10, The Mall, Beacon Court, Sandyford, Dublin 18 –    tel 01 213 59 40

© August 2017.  This article is not intended to be legal advice and does not purport to be so.  Amorys is a commercial and private client law firm in Sandyford, Dublin 18.