Articles, Blog

Commercial Lease Review-What are the usual terms and conditions of a FRI lease?

Commercial Lease Review-What are the usual terms and conditions of a FRI lease?

okay in today’s video I’m going to take
a look at what’s involved in a commercial lease that is you’re taking
on some sort of a premises you’ve been granted a new lease or perhaps you’re
being given an existing lease a lease is being assigned to you but for the sake
of this particular video I’m going to look at what’s involved in the lease
what are the constituent parts of us now before we go through the lease one thing
I would emphasize very very strongly is that the lease is only one part of the
relationship between you as a tenant and the Landlord and the premises what I
mean by that is that there are other issues that need to be looked at outside
of the specific four walls of the lease and what I’m referring to there would be
things like planning issues planning permission and building control
regulations and so on building regulations for the premises I’m
referring to good title that landlord has good title to give you or grant the
lease once various external factors have been looked at and satisfied that is
planning good title outgoings rates mines no company fees and so on then
you’re looking at a lease the lease we’re gonna look at in this video is a
typical full repairing and ensuring lease for letting of an entire building
with a guarantee now your lease may or may not involve a guarantee don’t be too
concerned about that it’s precisely the same principle it’s precisely the same
type of lease this lease then as I say we’ll go through it and we’ll see what’s
involved so firstly the early part of the lease is going to set out landlord
tenant on the guarantor if there’s a guarantor the lease will then just
basically hear summarize the term and the number of years so it could be four
years and nine months it could be 10 years 15 years 20 years 30 years
whatever length of time is a grade between landlord and tenant rent reviews
then would normally be carried out every five years but it could be carried out
every seven years or every three years but generally it would be
failures and then the initial rent is gonna be summarized here so it’ll be
euro figure oversee and it will be including or excluding fat that’s
something that you need to be very very careful about it will be subject to
review and review and take place whatever number of years is greed so if
you look at the beginning of the late set to set out who the landlord is who
the tenant is and who the guarantor is if there is a guarantor then you’re
gonna have a number of definitions as a none illegal document any contract and
it is a contract essentially you’re gonna have definitions sort of refer to
the property and various other definitions there’s no need to go
through that too carefully at the moment except to draw your attention to one
point five years which says the demised premises so that’s referred to its
described rather in a four schedule that’s the premises that you’re renting
you need to be careful about that and be careful that you’re getting precisely
the premises that you think you’re getting so the initial rent will be
referred to here and it’ll say what the initial rent is so 10 grand 15 grand 50
grand over or whatever it is every year you’re gonna have insured risks that’s a
standard sort of a standard sort of a clause you have an internal declaration
here and an external declaration here there will be obligations to decorate
the premises internally and externally again check the lease see what is the
obligation is that every year every three years every five years or whatever
outgoings then would be referred to here as you can see and out coins would
include the likes of commercial rates taxes charges management company fees I
think that’s affecting the premises are non going out going or an ongoing yearly
basis the committed user is important you may have a permitted user as you may
be permitted to use the premises as for example a nail bar or a hairdressing
salon then you cannot turn around if that doesn’t go well and turn it into a
fast-food takeaway or something of that nature without the consent of the
landlord plan then here refers to the plan if any annexed to the least so that
would be the map or plan of the premises that you’re getting
planning acts refers to obviously playing acts generally and that’s a sort
of a sort of a boilerplate definition quarterly Gale days most leases will
make provision for paying rent either monthly or quarterly so if its quarterly
it may well be the first day of January 1st of April 1st to July 4th October and
so on the rent commencement date will tell you when the rent commences so you
could enter into a lease on the 1st of January but you may get a rent a free
period of say three months or something in which case the rent
commencement date won’t be able to see a marked area for long whenever the tenant
then obviously refers to the particular tenant you if you’re taking it on term
is a number of years the commencement days again if it’s a fourth of January
lease for example or the fourth of July lease that the really commencement days
utilities then that’s obviously fairly self-explanatory interpretation then
that’s more definition is quite frankly it deals with who’s landlord is and so
on and it refers to references to the landlord and any reference to cause or
sub-clause that’s all sort of boilerplate stuff number three then is
important basically the meat and drink of this
lease Annelise is where the landlord demises our premises onto the tenant
together with certain other rights subject who writes easements and
privileges and so on and so forth so basically the landlord assigns the
premises or demises the premises rather to the tenant under certain conditions
and those conditions are set out in the lease here then you’re going to have a
whole series of tenants covenants so basically the most important covenants
that the tenant is going to give by entering into the lease would be a to
pay the rent be to pay outgoings and see the carrier who pairs repairs then will
depend on the or rather the extent of the repairs will depend on whether it’s
an internal or full repairing ensuring lease or not if it’s a short-term lease
it may well be that you’re only responsible for internal
if it’s a fully repairing insuring lease for a long-term for example 10 15 20
years then the likelihood is you’re going to be responsible for external
repairs in addition to the internet so be careful about that and make sure you
know exactly what the story is decorations tend to be carried out in a
good and Rockman like manner and so on the tenant also covenants to keep all
parts of the premises clean and tidy and the to maintain errs and then at the
expiration or sooner of the term in other words when the lease is over to
give up the premises to the landlord again the tenants fixtures and effects
then whatever the situation is in relation to fixtures and fittings
that’ll be set up their common facilities you may be required to pay to
the landlord some contribution some proportion of the overall expense so it
could be a multi-unit building there may be common areas may be common stairs or
lists or something of that nature or indeed it could be a shopping center if
there’s common facilities then there’s going to be a contribution requested
from each tenant of each premises rates eventually by the landlord the landlord
will be permitted to enter the premises from time to time under certain
conditions and the tenant also covenants to comply with notices and in notices
that are served on the tenant so the landlord may say look at your invoice
your condition or you’re making a covenant here’s an office to that effect
then your must comply order that’s an obligation of the tenant then the tenant
must also give a covenant in relation to the operation of the demise premises in
other words not to carry on a business or operate the premises in such a way
that it causes a risk to the premises or a risk to the insurance or a risk of
basically the place going up in fire or something of that nature user then again
is not without the prior written consent of the landlord to use in the Meijer
premises except for the permitted user in other words if it’s an ale buyer or
hairdressing salon that’s what you can do you can change it but you need the
consent of the landlord you need the prior written consent of the landlord
that’s important you also need to it’s a factory in alterations in other
words what sort of alterations are permitted and what sort of alterations
and mic required the written consent of the landlord you must also consider that
alienation alienation involves selling your lease or transferring at least
somebody else you will need the written consent of the landlord he or she cannot
withhold this unreasonably but is entitled to get a tenant as good as you
were likewise landlords expenses to pay an
identified landlord against all costs arising from the preparation of notices
or the recovery or attempted recovery of rears so if the tenant is in breach of
the lease in relation to for example a non-payment of rent and the Landlord
strictly speaking is entitled to recover his expenses in pursuing his rent
statutory requirements again the tenant is obliged to comply with various and
all statutory requirements most basically uphold and enforce the law and
then re letting in a planning application notices the landlord is
permitted the covenant of the tenant is to permit a landlord at all reasonable
times that put up notices about relenting 2/10 the premises and so on
when it comes to that the Canon also gives an indemnity to the landlord to
indemnify him the landlord against all actions and
proceedings claims arising from the use of the premises and then the tenant also
covenants to pay stamp duty and value our attacks if value-added tax is
appropriate and he’s been charged on the lease the tenant will also have to take
out insurance and may need to make a contribution to the landlord’s insurance
of the entire building again that’s something that you’d want to be looking
at closely with your solicitor but there will be an insurance covenant on the
tenant in the lease you’d then go on to a section 5 here you’ll see landlord’s
covenant so basically the landlord covenants with the tenant to allow the
tenant to quiet enjoyment of the premises provided the rent is paid and
so on and so forth the landlord will also covenant to ensure the premises
ensure the building and look for contribution perhaps from the the landlord will also covenant then who
or the guarantor may give covens then if there’s a guarantor and the guarantor
may make covenants basically to cover any shortfall of rent or pay the rent
essentially for the tenant if there’s any breach and we go down further than
disclaimer or forfeiture that’s kind of an obscure one does if a liquidator or
official assignee is appointed that the lease may well be forfeiture in other
words given back to the landlord or the liquidator if necessary the various
provides us then but one of the most important providers will be forfeiture
in other words under what circumstances can the landlord for faith the lease it
may well be that non-payment of rent particularly for a period of time
particularly after notices having been served and failure by the tenant to
comply with the notices failure to pay the rent will lead to a forfeiture
situation whereby the landlord is entitled to go to court and forfeit the
lease in other words take the lease back off the tenant covenants relating to
adjoining property it may arise it may not arise but you need to be careful
there that no adjoining property is affected by the lease that you enter
into and thus any rights of way that you might need down the side of a building
or that sort of thing or perhaps a common area for example for the storage
of waste or waste collection and you know you’re clear on the situation there
the applicable law then will be Irish law and you may have a situation where
you as a tenant negotiate a break cause or an option day’s an option day allows
you to terminate the term of the lease and at a particular days as of the
expert if you learn umber of years of the term of the lease so that’s
something you need to be careful about you try to negotiate that at the outset
just in case business doesn’t go grave it may not go quite as well as you hoped
then you may look for break laws and that’s a good sensible thing to do
you could look for break clothes after a year or three years or five years or
after say three years and failures or something of that nature
obviously the landlord won’t be that anxious for that and if you were he
agrees to break cards for you he’ll be looking for great clothes for himself
but that’s just the nature of negotiations and so forth
finance certificates except if it gets doesn’t arise now Assante
assent the landlord n will assent to the registration of this lease is a burden
on the property comprised in the folio this means that the property here that’s
been demised that’s the subject matter of the lease is going to be carved out
of register or of a leasehold already freehold folio rather that the landlord
owns and he will be consenting to you registering your lease as a burden on
his folio for sure you learn is the device premises so it’ll set out exactly
what the premises is and may well have a map attached it should have a map
attached if there’s any doubt or ambiguity as to the extent of the
premises that you’re renting ancillary rights there may be other rights or
attaching and key to the premises or key or use of it and there may be exceptions
and reservations in other words the landlord may reserve to himself the
right to go down the side of the building for example with a wheelbarrow
or so many of that nature it depends on the premises there may be exceptions and
reservations read reviews then this is important Clause this will set out the
basis on which renter views how retro views are to be carried out and
basically how often they’re to be carried out and obviously in the event
of the usual dispute about the rent landlord wants more money than the
tenant is prepared to pay then it’ll set out what the position is in relation to
the use of for example arbitration to arrive at a figure opportunity rent
review that’s not the constitutional position now that’s been changed rent
reviews can go down as well as what used to be the case that they were upward
only Rett reviews and that was constitutional but I was knocked down a
few years ago in Supreme Court it is unconstitutional to have a lease
with only an awkward only retro view this agreement or determination of the
reviewed rent again that’s to do with arbitration how disputes are to be
resolved if and when there’s a dispute about the rent hope you find this video
useful a notes of your long run but it quite frankly it’s taken 15 minutes for
me to do it it’s gonna take your it’s going to take your solicitor a longer
much longer period of time to take the necessary steps to ensure that you’re
protected and safe in terms of taking on the lease but when I say to you this
video is taking 15 minutes you should not rush into a commercial lease because
remember you’re entering into a covenant or concept by which you’re gonna pay
rent for 5 10 15 20 years so you better get your due diligence known at the
outset you better make your necessary inquiries and the 15 minutes that you
might spend watching this video hope you find it useful if you do give the thumbs
up down below and you may be interested in subscribing to my youtube channel my
youtube channel I produce a new video every week Saturday morning 7:00 a.m.
GMT and it’s about either area or a rich business thanks for watching and as I
said I would appreciate it if you gave a thumbs up down below

Tagged , , , , , , , , , , , ,

3 thoughts on “Commercial Lease Review-What are the usual terms and conditions of a FRI lease?

Leave a Reply

Your email address will not be published. Required fields are marked *