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    I am leasing commercial premises and have received an offer to lease. What should I watch in the commercial lease and should the lawyer be involved at this stage or only when the final lease is prepared?
    Posted: 2012-10-11 05:00:29


    It is common for real estate agents to prepare the offer to lease and for the lawyers to get involved in preparing the final leases. For larger premises, it is very important for the lawyer to get involved at an early stage of the preparation of the offer because the offer is a binding contract of lease. It is not like buying a house where you get the deed when you close the transaction. In the lease, you may take possession at any time and the offer, when accepted, becomes a binding contract which will govern the relationship between the landlord and the tenant in the absence of the final lease.

    When an offer has been signed there is a limited scope for the lawyer to give you real advice. He cannot change the terms of the agreement reached in the offer; he can only prepare the final lease based on the wording of the offer that you have signed. In a lease, there are many items which may not have been mentioned but can be very significant in the landlord and tenant's relationship in the future. For example, what will happen if the premises were burned down? An offer will often not talk about it. Is the landlord, in that case, going to rebuild or is he going to ask the tenant to leave the premises, and what happens to the tenant's business in the period of interruption when the premises are being rebuilt?

    In an offer to lease you need to look not only at what is in the lease but what is not in the lease. For example, if there is no mention of the parking for the cars, you need to be concerned as to what will happen to your parking as a tenant and where will your customers park. If there is no mention in the lease, you need to address the issue in the offer. Similarly, there are many issues which need to be addressed in the lease and diligent lawyers carry checklists of what should be reviewed when a lease is being prepared. With the experience of a lawyer who has dealt with leases, he is in a position to judge what is an important clause and what is not so important in the lease. For example, you need to evaluate whether you will register the lease on title or not.

    Commercial leases can end up being 20 to 30 pages long on legal size paper when complete. The offer to lease may be 3 to 6 pages long. Where does the lawyer come up with all the jargon to fill the pages? Those pages are filled to accommodate many different situations that can arise in the landlord and tenant relationship and they try to cover as many situations as possible. That is because the relationship may last 5 to 20 years and many questions can arise regarding the premises in that period. For example, who will repair the building if there is damage? Who is going to insure the premises? Will the tenant give a postponement clause if he has a registered lease when the landlord is trying to refinance the property with a new mortgage?

    There are many self-help books and information available on leases. You can even purchase self-help kits from stationery stores. What is difficult to buy ready-made off-the-shelf is the experience of a lawyer who has seen leases made and has seen leases with problems. His evaluation of wording can be of great help to a novice. Most experienced landlords or tenants do not make a move without their lawyer's comments.

    Mr. Jay Chauhan has more than 30 years of experience practicing Commercial law, Family law, Immigration law, Wills and Estates, and Litigation. Mr. Jay Chauhan earned degrees, including a Bachelor of Science from the London School of Economics in England; a Barrister-at-Law at Lincoln's Inn in England; a Master of Economics at the Berlin University in Germany; and a Bachelor of Laws at Osgoode Hall in Ontario, Canada. He was called to the Bar in Ontario in 1972, England in 1965, and admitted as an Advocate in the State of Gujarat, India in 1982. You can learn more about Mr. Chauhan by visiting his website at http://www.jaychauhan.com/
    or reading his bio.





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