Lease Agreements

David has vast experience in preparing Agreements for Lease for the following types of purpose built properties:
  • bulky goods centres such as the property at 660 Beeliar Drive, Success;
  • standalone service stations including those located at 204 Great Eastern Highway and Lot 322 Ranford Road, Canning Vale;
  • standalone child care centres.

What is an Agreement for Lease?

An Agreement for Lease is an agreement between the landlord and the tenant in which the landlord agrees to grant a Lease to the tenant at a future date, on the terms and conditions set out in the Agreement for Lease and the proposed Lease (with a copy of the Lease attached) and allows for future completion of any variables in the Lease that cannot be determined at the date when the Agreement for Lease is signed.
These variables are often:
  • the commencement date of the Lease;
  • the final rent payable under the Lease, if it is calculated by the area of the leased premises, once constructed;
  • the correct property details, if the property is subdivided after the date of the Agreement for Lease.

When would an Agreement for Lease be used?

Agreements for Lease are generally used in circumstances where it is not possible to determine the commencement date of the lease as there are conditions to be satisfied before the Lease commences. Common situations where an Agreement for Lease is used include:
  • tenant has agreed to lease premises that are not yet constructed;
  • the landlord has agreed to carry out works on an existing property as required by the tenant.

Key aspects of an Agreement for Lease

An agreement for lease will allow for the following issues:

1. Lease commencement date

A mechanism for the determination of the lease commencement date as this is a fundamental aspect of agreements for lease. The commencement date is usually:
  • The issue of an occupancy permit following completion of the landlord’s works and when the tenant first gains access to the Leased Premises; or
  • After a fixed period after that date to allow for the Tenant to do its fitout works; or
  • When the Tenant commences trading from the Leased Premises.

2. Conditions Precedent and Sunset Date

In most Agreements for Lease there are a number of conditions that must be satisfied, these include:
(a) the approval of the local authority to the construction of the premises;
(b) the obtaining of a building quote that is satisfactory to the Landlord;
(c) finance approval for the cost of the construction;
(d) becoming the registered proprietor of the land in certain instances.
The above conditions then have to be satisfied to allow for the building to be constructed.
Often an Agreement for Lease will contain a sunset date which allows both parties to terminate the Agreement, without penalty, if the construction of the building is not completed by a pre-determined date.

3. Variation of Lease

As mentioned above, the Agreement for Lease will allow for the variation of limited aspects of the Lease and insertion of commencement dates and rent determined upon the survey of the leased premises.

4. Lease to be binding even if unsigned by the Tenant

The Agreement for Lease will provide that the Lease is binding upon the Tenant from the commencement date of the Lease, as calculated in accordance with the Agreement for Lease, so that the Tenant is liable for its obligations under the Lease from the date that the conditions precedent are satisfied.

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