Archive for March, 2011

7 things office tenants should know before signing a lease

3/7 Know your landlord

Most leases are more or less the same being based on the ADLS form but that does not mean landlord’s behave uniformly. Several times recently I have observed tenants in the market focus completely on the financial aspects of the deal and fail to investigate who their new landlord is.

It’s true that some landlords have poor reputations, some of them are even deserved! A landlords job basically is to provide quiet enjoyment to his tenants, that means the buildings services must operate, comply and be serviced regularly. The building should remain waterproof and free from rubbish, contaminants or other nuisances and even step in to protect the tenants from each other when their relationships get strained.

A landlord/tenant relationship is a marriage of sorts with a defined term but potentially open ended with each party offering the potential of renewing further into the future. As such it is my view that a certain amount of ‘courting’ is advised. Landlords often investigate potential tenants with credit checks, ask for references or security in the form of guarantees. Tenants should investigate not just what but who they are letting themselves in for. Traditionally real estate agents are taught not to let the two parties meet, I have had the experience of such a meeting not go well and lost a deal as a result. The objectives of landlord and tenant are completely opposite, one party wants the rent to be as high as possible and locked in for a very long time and the other wants to cut any cost they can and retain flexibility with short term lease commitments. Real estate agents have duties of care that in my view involves allowing tenants to form their own view rather than rely on your advice which will no doubt return to bite you later….

A landlord’s delivery of quiet enjoyment will vary widely and depend on their objectives and ambitions for their property and of course their personality and management style. In some cases having a professional property management firm to look after the building and tenants is preferable to an individual landlord doing these things himself. In other cases landlords offer personal attention and react quickly to any request large or small.

The best advice I might offer to my tenants to say look around the building, do the lifts work, is it clean and tidy, check the toilets and common areas. And meet with other tenants, ask them whether they are happy with the building (whinging about the lift is par for the course), are they happy with the landlord, does he respond quickly or ever? Are his charges for electricity reasonable and verifiable?

Commercial leases are for fixed terms, tenants can’t easily leave their office floors or shops if they don’t get on with their landlord, they have signed a contract promising to pay a rental until the expiry date and landlords can easily seek legal remedy against you if you decide to stop paying even if you no longer occupy their space. I can recall the story of one overly proud landlord who was very pleased with his first office tower purchase and regularly called in to visit his tenants. One day he burst in on a doctor conducting a personal examination on a patient and the doctor promptly packed up and left. I understand the landlord decided not to pursue the doctor for the rent for the remainder of his term.

March 31 2011 | Uncategorized | No Comments »