A good lease for your business premises is vital and could mean the difference between success or failure.

A poor leasing decision can be a costly mistake as a lease is usually central to the goodwill, value, and future sale of the business.

What is a lease?

A lease is a legally binding contract, so while leases may be complex and difficult to comprehend, it's essential that you fully understand the terms and conditions before making a commitment.

Before you sign the lease make sure you understand the key commercial property leasing issues so you are in a better position to negotiate terms. Download the BizGuide: Commercial leases - main issues to consider for more information.

It is also important that you understand your rights and obligations in relation to the lease in order to deal with any disputes that may arise and to know who to contact for help.

Legal and commercial advice should be obtained before:

• making any commitments to buy, lease, take on an assignment or incur any other obligations;
• signing an offer to lease or any other lease related document;
• payment of any deposit or other monies; and
• occupying the leased premises.

Together with legal and financial advice, you should also seek business and property advice in order to ensure the lease is based on sound business and property principles.

Retail premises legislation

The Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA) regulates many retail shop leases in Western Australia.

An understanding of the Act is essential if it regulates your lease. Even if your lease is not regulated by the Act it's a good idea to make sure you're familiar with it as you might wish to negotiate some of the provisions of the Act into your commercial lease.

Which leases are regulated by the Act?

The Act covers leases for:

• premises located in a retail shopping centre that are used wholly or predominately for the carrying on of a business; and
• premises not located in a retail shopping centre used wholly or predominately for the carrying on of:
  
  • a business involving the sale of goods by retail, or
  • a specified business (currently drycleaning, hairdressing, beauty therapy, shoe repair and sale or rental of video tapes).

excluded however are:

• leases of premises that have a floor area that exceeds 1,000 square metres;
• leases held by public companies or their subsidiaries; and
• petrol stations operated under a particular type of franchise agreement.

Seven steps to leasing commercial premises

Leasing generally involves the following seven stages. Each of these activities can be extensive so ensure you allocate adequate time to deal with each step properly.

Step 1: Consider your leasing needs
Step 2: Inspect and research premises
Step 3: Obtain preliminary documentation
Step 4: Obtain professional advice
Step 5: Negotiate the lease
Step 6: Preparation of final documentation
Step 7: Fit-out of the premises

Dispute resolution

Disputes arise between tenants and landlords from time to time and should be resolved as cost-effectively and with as little damage to the relationship as possible. Whatever method you use to resolve the dispute, you must be logical and clear about the facts and prepare your case well. Be prepared to argue your case calmly and organise the evidence to support your position.

First, read the lease and other associated documents to clarify the rights and obligations of each party about the issue in dispute. In many cases, a well-written lease will set out what both parties have agreed, and the action required will often be obvious.

If the lease or other lease documents do not clarify the issue, then obtain professional advice

There are four options available to resolve your leasing dispute:

• informal negotiation;
• mediation;
• the courts; and
• the State Administrative Tribunal

For more information download BIZGuide: Dispute resolution - commercial and retail premises

What's next...

• Step 1: Consider your leasing needs
• Step 2: Inspect and research premises
• Step 3: Obtain preliminary documentation