You have just started your business and all the excitement is in the air with printing of business cards, company profiles and acquiring new office space for your business operations. More often than not, all the excitement of a new business venture can lead to one overlooking certain important aspects of a business especially when it comes to entering into a commercial lease agreement. most small companies enter into commercial agreements without properly negotiating the terms of the agreement nor understanding the legalities that pertain to the agreement.
We have been approached by various small businesses who have found themselves in difficult, unparalleled circumstances not being able to afford the rental for their acquired space due to the impact of the ongoing Covid-19 pandemic. More often we have found that they have entered into a fixed term commercial lease agreement for a period of 3 to 5 years without considering the terms and conditions of the agreement properly. Most of the agreements we have reviewed on behalf of our clients make it impossible for the tenant to prematurely cancel the lease agreement, leaving the tenant with no automatic right of cancellation. Most landlords have resorted to instituting legal proceedings against the businesses for outstanding rental including damages and all the businesses that have approached us for assistance have all defaulted on their obligations in terms of the agreement. In the absence of an early termination clause, it has become difficult for their businesses to cancel the agreements and are left to negotiate a cancellation with the landlord since they do not have an automatic right to an early termination in terms of the agreement. Be careful not to up and leave the rented premises because the landlord will have the right to institute a claim against you and claim for any damages suffered as a result of your breach of agreement.
Before signing any commercial lease agreement make sure that you scrutinize the agreement carefully and have your legal advisor, attorney or legal consultant review the agreement for you before putting that ink to paper. This will save you a whole lot of time, money and headache should you wish to terminate the agreement. Be sure that you know what your rights and responsibilities are in terms of the agreement to avoid any unnecessary breach of the agreement. Should you not be clear or certain on issues around termination, ask your landlord on what happens if you decide to terminate the agreement early. Make sure that you know what you are agreeing to and what implications are there when it comes time for you to terminate.
If you are a startup, SME or entrepreneur and are in the process of the exciting venture of acquiring your own office space and would like us to review your lease agreement for you or to advise you on the lease agreement before entering into such agreement, contact us and we will sure be ready to assist you. Should you find yourself in a difficult situation of trying to exit your current lease and need to negotiate out of it, we are also here to help.
How can we help?
Send us an email at maconsultants@mfglaw.co.za and we will be delighted to assist you.