Each week at Lease1, we field several member calls per day with queries relating to a retailers shop lease and their relationship with the Landlord.
It is safe to say that the majority relate to a lack of understanding of the contents of the lease contract as well as the time table of events that may require action by the Lessee during the lease.
Recently Lease1 have received several enquiries where the Member has either not exercised their lease option or if they have neglected seeking to establish the market rent beforehand.
A Lease option for a further term is essentially your right over someone else’s land (property).
Each lease sets out the timeline to the notice period to exercise your right and importantly how that notice is transmitted.
Over the past 2 decades Lease1 has worked tirelessly to amend legislation to protect lessees in retail leases.
Most States now require a Landlord to send a reminder to the Lessee of their option and we anticipate after the completion of the Victorian review that Eastern States will afford Retailers the right to early determination of market rent.
The vital message here is “if you have a lease option regardless of when, you must set up and diary reminders on the critical path to this highly important lease event.”
For those Retailers who aren’t sure about what to do or don’t understand the process- get advice NOW!
On another important but basic issue is the area of Insurances.
A recent Member called seeking advice on the Lessor’s obligations to replace/repair shop fittings and stock damaged from a burst water supply. The Lessee was under the impression that as it was the Landlords appurtenance that failed and caused the damage they were wholly responsible for all the costs.
After running through a few background Q & A’s where we described how a Landlord and Lessee handle an insurable event (burst water pipe) and that the Landlord rightly was only prepared to replace the ceiling due to water damage.
We discover that the Lessee does not have any insurance to cover stock-in trade, fixtures, fittings, loss of trade and chattels.
This unfortunately is another area Lessee’s overlook.
Even though most are insured all too often when an event/claim happens some are under-insured.
Here’s a free kick for the Brokers- All Members should review their insurance policies annually – don’t just pay the renewal. And make sure your Insurer has a copy of your lease and the policy acknowledges the relevant lease clauses.
Lease options and insurance should not be treated lightly as these are two areas that can destroy your business value.