Property Leases

What are Property Leases?

A property lease agreement is a company contract between the tenant of a property (lessee) and the leased property owner (lessor) governing the conditions of the lease and its duration.

It explains the terms agreed regarding tenure and rent, as well as the upkeep of the property.

Commercial leases are usually complex; the terms and conditions being negotiable and therefore varying with each lease agreement.

Why are Property Leases important for business today?

Having a comprehensive collection of property lease agreements enables your company to:

• Safeguard against an arbitrary increase in rent for properties leased
• Mitigate against any confusion or misunderstanding that may lead to litigation
• Make sound financial decisions, as the agreement pre-defines the cost associated with the use of the property for a fixed period

Why is it important for an event tomorrow?

Having a comprehensive collection of property lease agreements is important for an event tomorrow, as it helps:

• Ensure that your business will continue operating smoothly from a consistent location
• Understand where the maintenance obligations lie in relation to the agreement
• Understand any change of control provisions that may be contained in these agreements

Pros of addressing Property Leases

• Clarity on the roles and responsibilities for both lessor and lessee
• Business continuity; security of staying at one place ensures consistency
• Accurate budget forecasting as costs remain the same for a fixed tenure
• Assess the expenses for permits required to engage in a business activity across jurisdictions
• Assist in contracting with third parties as per the guidelines and avoid any defaults

Cons of not addressing this topic

• Difficulties in forecast budgeting due to a potential or arbitrary increase in rent
• Disruption in operations if asked to vacate the premises without or short notice
• Increased due diligence cost and time due for management and potential investors.