Commercial Leasing: Hidden Clauses That Landlords (and Tenants) Often Regret

Are You Really Protected in Your Commercial Lease?

Signing a commercial lease is one of the biggest financial commitments a business owner or investor can make. Yet, hidden deep within the fine print are clauses that can dramatically shift the balance of power - often in favour of the other party.

Whether you're a landlord or a tenant, these overlooked clauses could leave you exposed to unexpected costs, legal headaches, and business disruptions.

The Clauses that Catch People Off Guard

Make Good Obligations - The Costly Exit Trap

At the end of a lease, tenants are often required to restore the property to its original condition. However, many don’t realise just how extensive (and expensive) these "make good" obligations can be. Landlords, on the other hand, sometimes assume the tenant will cover all restoration costs, only to find ambiguous wording in the lease leaves them footing part of the bill.

Market Rent Reviews - The Unexpected Rent Hike

Most commercial leases include rent review clauses, but the method of review can be a hidden landmine. A "market rent review" might sound fair, but without proper definitions or mechanisms in place, it could lead to an arbitrary increase, forcing tenants to absorb costs they didn’t plan for. Landlords can also find themselves in a difficult position if the review process is poorly structured, leading to disputes or undervalued rental income.

Relocation & Redevelopment - The Sudden Business Disruption

Buried in some leases are clauses allowing landlords to relocate tenants or terminate the lease if they decide to redevelop the property. While this provides flexibility for landlords, it can be a nightmare for tenants who suddenly need to find a new premises, often with little compensation or notice.

Outgoings & Hidden Costs - Who Really Pays?

Outgoings clauses often seem straightforward, but poorly defined terms can lead to disputes over what costs tenants are responsible for. Unexpected maintenance fees, administrative charges, or even costs related to capital works can leave tenants with unexpected bills, while landlords who fail to draft clear terms may find themselves locked in disputes over recoverable expenses.

Personal Guarantees - A Lifetime Commitment?

Many tenants sign leases personally rather than through a company, not realising they’re putting their personal assets on the line. Even after exiting the business, some guarantees don’t automatically lapse, meaning former tenants (or their directors) could be pursued for unpaid rent or damages years later.

Why These Clauses Matter More Than Ever

In the current economic climate, businesses and property owners alike are under increasing financial pressure. Misinterpreting or overlooking key lease terms can mean the difference between a profitable investment and a legal battle.

Landlords need to ensure their lease agreements provide long-term security without deterring high-quality tenants. Tenants, meanwhile, must negotiate terms that protect them from unnecessary liabilities.

The bottom line? Understanding these hidden clauses before signing a lease can save both landlords and tenants from costly mistakes.

Would you know how to spot these clauses in your lease? More importantly, do you know how to negotiate them in your favour?

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