Listed below are some common pitfalls facing small to medium business operators.
Once you’ve signed a lease you’re stuck with the payments and obligations for the duration. So you need to make sure that what’s in it is not going to cause you problems. Read it thoroughly and make sure you understand all of it. People get caught all the time with obligations they never knew were in it because they didn’t read all of it. We highly recommend people obtain legal advice before entering into leases and other
business contracts and agreements.
Example:
Gina signed a 5 year lease for a great shop at the main entrance to a large but old shopping centre that could have done with a lick of paint. She was so pleased with the prime position she signed. In the lease was a clause that said the landlord only had to give 3 months notice if he wanted to renovate. Gina was offered a shop at the rear of the centre for the duration of her lease with no reduction in the rent. She was furious. She was stuck.
A lawyer would have gone through the lease and made sure she understood all the possibilities that would be in the landlord’s favour and not hers. This was an expensive exercise for Gina who was now paying top rent for a shop with poor passing trade for another 4 years. For a relatively small payment of legal fees she could have saved a small fortune.
Example:
Joe & Dan signed a lease for their new business premises. Joe and Dan had a disagreement and Dan left…BUT after Dan left Joe caused some damages to the premises. The landlord sued Dan because his name was still on the lease. It costs Dan $20,000.00. He needed to get an indemnity from future liabilities from Joe to release him from his obligations on the lease when he left. It cost him thousands when a trip to see his lawyer at the time of leaving could have cost a lot less for a Deed of Indemnity.
If you would like further advice please don’t hesitate to contact us on 08 6141 1513 to make an appointment.