Various Commercial Leases

Commercial Leases

● Commercial leases and retail leases have certain nuances. Retail tenants enjoy the protection of the Retail Leases Act and benefit from requirements such as the prohibition from paying the lessor’s legal costs.

● As commercial tenants do not enjoy the benefit of the Retail Leases Act, it is crucially important to seek legal advice on commercial lease documents including incentive deeds and lessor works deeds prior to signing.

● Proper legal advice should achieve the following:

     - Ensuring that agreed terms including any incentives are clearly set out;

     - Any overly stringent obligations on the tenants are removed.

● We have assisted many commercial and retail leasing clients and recently the Chinese Visa Processing Centre acquire new premises.

● Prior to signing the lease, we negotiated a number of terms including:

     - No requirement on the tenant to make capital works in relation to the maintenance of the air-conditioning system, this is particularly important where the air-conditioning system is old and nearing replacement age;
     - Typically in leases, the lessor requires the tenant to release the lessor from all loss and indemnify the lessor against any claims, it is prudent to exclude any circumstances where the loss or claim is caused by the lessor;

     - Ensuring any make good obligations does not require the tenant to do more than restore the premises to the condition as at the date of commencement, wear and tear permitted.

● We also assisted an assignment of a commercial lease for our client Hainan Airlines. When assigning a commercial lease, it is important to ensure that:

     - all obligations of assignor is released including those of any guarantors;

     - Any benefits to incentives are assigned to the assignee; and

     - All bonds and guarantees are returned upon execution of the deed of assignment of lease.

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