Sorry for such a basic question!
- Thread starter Mamaof3
- Start date
HI there
the reference is usually to an initial term of five (5) years with an option for a further (5) years after appropriate notice is given.
Commercial leases are far more favourable for the landlord with the tenant obliged to pay most outgoings for the property and also maintain the property - often having an obligation to refurbish it during the tenancy.
thanks
the reference is usually to an initial term of five (5) years with an option for a further (5) years after appropriate notice is given.
Commercial leases are far more favourable for the landlord with the tenant obliged to pay most outgoings for the property and also maintain the property - often having an obligation to refurbish it during the tenancy.
thanks
The lease agreement will also have an agreed annual increase in rent. Usually something like 5%pa, or CPI + 2% etc. Then at the end of the 5yrs, if the tenant wishes to exercise his option, there is a market rent review at which point if the market has risen substantially - the tenant will be up for substantially more (the one I just had was 20%).
Yes I was the tenant in the deal. As Dazz puts it, I had to grab the vaseline and hold on tight! 
See: http://www.somersoft.com/forums/showthread.php?t=39884
See: http://www.somersoft.com/forums/showthread.php?t=39884
Just keep in mind that the option to renew is the Leasee's not the Leasor's (landlord).
Yes however you also have to remember that the LL can set the new lease price. Depending on the wording of individual leases, they can do what they like. Small guys can be forced out if the LL get's offered mega bucks by national tenants who can afford much more - seen it happen in my industry. It also happens naturally after a while when locations become very popular/chic - gradually the small businesses operators become fewer and fewer in place of large national chains. But hey, that's business!
It can also happen the other way. During the "depression we had to have" rents dropped like lead baloons, in industrial property anyway and vacancy periods became very very long.
BTW I can't see any reason why a leasee can't ask for a different lease period to the one stated in his option when his current lease expires. Of cause the LL doesn't have to agree.
The point about the option being with the leasee is that the LL can't demand a different lease period or rent to a different tenant if the current one wants to pick up his option and is willing to pay the market price.
Sorry to be contrary but to the best of my knowledge a tenant can't assign an option. He can only pick it up or not.
BTW I can't see any reason why a leasee can't ask for a different lease period to the one stated in his option when his current lease expires. Of cause the LL doesn't have to agree.
The point about the option being with the leasee is that the LL can't demand a different lease period or rent to a different tenant if the current one wants to pick up his option and is willing to pay the market price.
Sorry to be contrary but to the best of my knowledge a tenant can't assign an option. He can only pick it up or not.
.....and said assignment in most well written Leases is extremely difficult to satisfy.....and in the really good Leases, the overall liability of the original Lessee is not expunged by the assignment. This really puts the fire to the feet of the Lessee.
He either carries that liability fully for the further term whilst some other business does what they like - or they give up the Lease if they don't want to pay the market review rental set by the Lessor.
Both options should look reasonably ugly to the Lessee.
If the Lessee is able to simply effortlessly assign the rights and interests of the Lease to any Tom, Dick or Harry, then the Lessors solicitor needs to be run off.....and the Lessor needs to go back to school for having signed it.
He either carries that liability fully for the further term whilst some other business does what they like - or they give up the Lease if they don't want to pay the market review rental set by the Lessor.
Both options should look reasonably ugly to the Lessee.
If the Lessee is able to simply effortlessly assign the rights and interests of the Lease to any Tom, Dick or Harry, then the Lessors solicitor needs to be run off.....and the Lessor needs to go back to school for having signed it.
Spot on! My parents were in this situation years back with Con Makris. Mum wanted to sell the business but it was almost time for the new lease. But because she was a good tenant and Con liked her, he wouldn't let the new guy on the lease - he still wanted her name on it to gurantee the place. So if 3yrs later the other guy left for whatever reason, my mum would have to set up shop again.
Smart operator.
