Leasing and Licensing

Leasing, is the renting of property. A lease ensures a tenant (lessee) has the right to use premises on agreed commercial terms in return for regular periodic payments to the landlord (lessor). Both the lessee and lessor have a number of other rights and obligations pursuant to such an agreement.

Everything seems to have opposing sides – buyer or seller – defendant or plaintiff – landlord or tenant. The context of each transaction will be similar but will vary depending on which lens you are looking through.

Everybody has to protect their own interest and like every other legal document, you should expect the lease terms to reflect the preparing party’s interests. The naturally one-sided nature of many terms in such agreements, inevitably results in some level of conflict or resistance and it being necessary to obtain the right legal advice for any transaction of this kind.

Landlord

As the landlord / lessor you will want to let your premises to someone who:

• is of good character and reputation,
• is financially viable,
• will pay their rent and look after the premises.

Your lease will inevitably cover a host of items to:

• adequately protect your asset,
• protect the income expected from the lease,
• outline maintenance of the property,
• outline use of the property; and
• ensure flexibility to dispose of or demolish the property if your circumstances change.

The nature and extent and variety of any terms in a lease are tailored to individual circumstances and properties.

As the landlord, you will want to pass on as much risk or responsibility onto the tenant as possible. Whether the consideration is whether the use of the premises is allowed by council, whether licensing is required or whether the air-conditioning unit needs to be maintained, these among others, the landlord will seek to place on the shoulder of the tenant because you do not want to be exposed to the risks of non-compliance.

In addition, there is a raft of commercial considerations a landlord should have covered and a few of those are:

• Yearly rent reviews
• Water, electricity, cleaning
• Signage
• Sublet permission
• Damage and repairs
• Renovation and decoration
• Early termination
• Demolition and rebuilding
• Rezoning and relocation.

We provide comprehensive advice as to the necessary terms and conditions to be incorporated into any proposed lease, to minimise your risks, protect your interests and eliminate the stress of the arrangement.

Tennant / Lessee

As the tenant/lessee your considerations are different to the landlord.

Some items to consider are:

• Signage, how much and where is it to be installed, can it be illuminated, what about the neighbours?
• What if I want to terminate the lease early?
• What if the landlord has a termination clause? How much help do I get with relocation?
• If you have to relocate for whatever reason how does that affect your branding and marketing?
• What fixed costs will you be liable for?
• How is your rent increase calculated?
• Are all your interests covered to limit risks and uncertainties?
• What obligations do you have throughout the term of your lease?
• Are your insurances in place?

There will be a number of other considerations that you will need to make that are important to you and, based on our experience, there will be plenty of things you have not thought about or considered important.

Just like the many considerations discussed with landlords above, as a tenant you will have similar ideas:

• How do I minimise my risk and uncertainty?
• How can I maximise flexibility in my lease should circumstances change?
• How can I transfer some responsibility to the landlord?

Your interests are in the commercial considerations behind the scenes, you want to ultimately lease a premises to run and build a business and you do not want this to be hampered or interrupted by technical lease terms or burdens.

Our obligation is to ensure your commercial interests and legal obligations are known to you, the proposed lease clearly explained to you and negotiated on your behalf and the burden taken off your shoulders to ensure the premises and the proposed terms offered are suitable for you and your intended purpose.

Licensing

The difference between a lease and a licence is, if you have a lease you are typically registered on the title and you are paying for an exclusive right to use an area.

With a licence you are not registered on title but you are allowed to use a defined area for a specific purpose.

The licensing agreement or contract documents your right to be in a specific area and all the rights and obligations that come with it. Some other examples might be:

• • A car space

This is not on the title but it can be licenced to you for the term of your lease

• • A satellite dish

You are given certain rights and conditions to attach your satellite dish to a building that you have no other recognition or interest in

Often there will be a lease, such as in the case where you lease a shop and in addition you are granted a licence to use part of the footpath for seating.

Licensor

As the licensor you will want to have documents in place to ensure the licensee behaves in the way expected of them and appropriately at all times. It is important to ensure that terms and conditions in any such agreement cover all possible variables or uncertainties that might occur so that your rights and interests are protected in the commercial terms.

In each case the terms and conditions will vary widely depending on the parties, the nature of the area to be licensed, the use of the area and other specific intentions or commercial ventures. This is not the place for a template document, but rather one that is drawn up to specific needs and intentions to protect you.

Licensee

The starting point is that the licensor will prepare a contract to cover their interests and the general expectations of you in respect of any license. You will need to ensure that the document reflects exactly the area and use you intended it to cover, you will also need to ensure that any conditions or limitations imposed are reasonable and that you can easily satisfy them.

For the licensee it is important to have a lawyer review the terms and conditions and negotiate any changes on your behalf so you are adequately protected and ensure there are no surprises.

Each of these types of agreements state who pays any loss or damage, who is entitled to do what, where and how and are drafted to minimise exposure to risk.

We listen carefully and ask the right questions to ensure your intentions and expectations are clearly known. In doing this, we can ensure that all the relevant commercial and legal terms are included or negotiated, covering a whole host of variables prior to taking up the licence, so that a later disagreement can be prevented.

Speak with Our Leasing Lawyer Experts About Your Next Lease

Gavel & Page legal professionals are happy to speak with you about your leasing requirements in Sydney.