LEASES can be complex and difficult to understand, according to the Small Business Development Corporation, but they are legally binding contracts vital for a business’s premises. A lease is also usually central to goodwill, value and future sale of the business. The SBDC says it is important that business operators understand the terms and conditions before committing a signature. A lease may be standard but terms and conditions can be changed by negotiation to suit both parties. The SBDC said leasing generally involves the following stages: inspection and research of premises; obtaining preliminary documentation; obtaining of advice; negotiating the lease; preparation of final documentation; and fit-out of the premises. Each of these activities should have adequate time provided to ensure a proper appraisal is under-taken and, vitally, all documents relating to the lease should be obtained and read, including any assignment documents. Important issues to cover are, according to the SBDC: •tenants should ensure that all a landlord’s (or their agent’s) representations and details be given in writing; and •inquiries and research should be undertaken in relation to the business, the lease and the property (including comparisons) before incurring any obligations such as a lease. The SBDC recommends that prospective tenants obtain legal and commercial advice before signing an offer to lease, payment of any deposit or occupying the leased premises. It also urges business owners to be prepared to walk away if the conditions are not acceptable and cannot be negotiated to the lessee’s satisfactorily. In addition to the terms of the lease, many commercial tenancies in Western Australia are regulated by the Commercial Tenancy (Retail Shops) Agreements Act 1985. A prospective lessee ought to understand these laws. Under the act, when a new lease is being considered and before any commitment is made, a tenant should receive a disclosure statement, a proposed lease, a tenant guide and an operating expenses budget.
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