Page 94 - LCNL Diwali Magazine

RAGHUVANSHI 2023 - 2024 HAPPY DIWALI

Commercial Leases: A Landlord’s Perspective

When dealing with commercial leases, landlords have a vested interest in ensuring that
their rights and financial interests are adequately protected. A well-drafted commercial
lease should provide the necessary framework to establish a mutually beneficial relationship
between landlords and tenants.

In this article, we will delve into the key elements that a landlord would want to see in
commercial leases.

1. Clear and Comprehensive Lease Term

• Clear definition of the lease term, including the start and end dates.

• Explicit provisions dealing with early rights to terminate (break clauses) lease renewal or other options to extend
the term, allowing the landlord to plan for the future.

2. Provisions Dealing with Rent Payment Terms

• There should be clarity on the rent amount, frequency, and method of payment.

• Provisions for rent adjustment by way of rent reviews, ensuring the landlord’s income keeps pace with inflation and
market trends (nationally and locally).

• Penalties or interest clauses for late rent payments, incentivising timely remittance from the tenant.
3. Detailed Maintenance and Repair Obligations

• Clear demarcation of tenant responsibilities for maintaining the premises, including structural (where lease is of
the whole) and cosmetic repairs.

• Allocation of responsibilities and cost contributions for common and shared areas, such as hallways, landscaped
areas, and elevators.

• Clear procedure for reporting and addressing maintenance issues promptly, including provisions allowing the
landlord to step in where the tenant fails to comply with its maintenance obligations.

4. Appropriate Use and Subletting Restrictions

• The permitted use of the property should be clearly set out, preventing activities that could negatively impact the
property, adjoining property owned by the landlord or surrounding businesses.

• Restrictions on subletting or assigning the lease without landlord consent, ensuring the landlord has the ability to
assess the financial viability over who occupies the space.
5. Allocation of Operating Costs

• Allocation of operating expenses, such as property taxes, insurance, and maintenance costs, between landlord and

tenant.
• Mechanisms for reconciling and adjusting common area expenses.

• Transparency in providing necessary documentation and evidence to support cost allocations.

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