Some dangers to consider before signing a Lease
A Lease governs your rights, and responsibilities, concerning the Premises to which it refers.
This applies –
whether you own the Premises (Landlord), or pay for the right to occupy it to the exclusion of all others (Tenant);
for the duration of the Term of the Lease; and
in most instances, for any further period of the Lease.
Who, then, prepares the Lease?
The “golden rule” applies. That means, he who has the gold makes the rules!
Therefore, ordinarily the Landlord (or their solicitor) prepares the Lease. There are some exceptions. For example, if the Tenant is a major corporation who has the bargaining power to dictate terms to the Landlord.
Whether you are a Landlord or a Tenant, you should start by considering the following before you sign a Lease -
Is the Lease template provided by a universally respected provider?
For example, for commercial or retail real estate, is the template supplied by the Law Institute of Victoria (LIV) or the Real Estate Institute of Victoria (REIV)?
If the Lease is a standard form, but not from the LIV or REIV, you should ask “Why?”
Further, if the Lease is an individualised creation (even if by a law firm), that should raise significant concerns.
In my experience, a non-standard Lease is often onerous to both the Landlord and the Tenant.
To the Landlord, the inclusion of tailored special conditions within, say, the LIV or REIV Lease, should satisfy any unique requirements. A possible reason for the departure from the standard form, could just be to justify otherwise excessive charges by the drafter.
For a Tenant, it is even worse. The conditions included in the Lease may well be significantly onerous, and included in the hope that the Tennant does not realise what they are signing. Otherwise, there is often no justification to depart from the industry accepted standard and include any onerous terms (beyond those set out in the industry standard) as special conditions.
