Commercial premises lease agreement – everything you need to know

    Commercial premises lease agreement – Everything you need to know, or a brief dictionary of rental agreements:  "A" for apartment arrangement.  This can lie with the landlord or the tenant. In other words, the owner can prepare the premises to an agreed standard (described in the agreement or an annex to it). Alternatively, the premises can be handed over to the tenant in, for example, a shell condition (developer standard) or as left by the previous tenant. In practice, it is worth dedicating a significant amount of time to this part of the agreement, as many conflicts related to the lease agreement arise at the stage of furnishing the premises – before the actual period of using the rented premises begins. This means that we should describe in detail the desired condition of the premises on the handover date, or the changes we want to make ourselves – so as to avoid unnecessary misunderstandings at the agreement stage. If we decide that the tenant will be responsible for the refurbishment of the premises, it often turns out, for example, that the tenant plans works requiring a building permit, or noisy and "dirty" works, i.e., those that may disturb neighbouring premises. It is therefore advisable to also agree on the timeline for carrying out the works, the rules for obtaining permits (this also requires the landlord's cooperation), and the rules of liability, including liability for disruptions to the operation of other premises.   Are we a landlord or a tenant? What unites us and what divides us?  During contract negotiation, it may seem at times that the interests of both parties are entirely divergent – however, in practice, during the performance of the lease, these interests differ very little. The common interest of the Lessor and Lessee is to conclude a legally compliant, transparent, and clear commercial lease agreement that will ensure a conflict-free period of cooperation. A good agreement is one that both parties treat as a permanent solution. It is also one that is easy for both parties to interpret and manage. It is important not only that a lawyer understands it, but also that individuals who will be executing it daily – i.e. administrators, accountants, building managers, etc. – can understand it without any problems or doubts. Therefore, the simpler and more transparent the language used, the better. The hermetic nature of legal language is not the path to heaven, but to hell. The agreement must also be easy to execute; a large number of written notifications, confirmations, return receipts, notifications, and other onerous obligations are something to be avoided. Why? Because experience teaches us that the more such requirements we include, the more contract breaches there will be. Of course, as a rule, parties wanting to cooperate amicably will not take consequences from this fact. Similarly, with ambiguities – parties often differ in how they measure commercial space or determine who should bear certain costs (taxes, utility fees, additional charges, administrative fees, costs of necessary repairs, etc.). The scope of responsibility for damages or potential repairs is also interpreted differently, and legal regulations and case law are decidedly unclear in this regard. Clear and precise determination of precisely these elements of the contract lies in the best common interest of both parties to the commercial lease agreement. What is the purpose of the premises? Where is it located and for what will it be used by the Tenant? Does the Landlord agree to this? Completely different provisions will be included in a lease agreement when it concerns a typical commercial property like a retail unit in a shopping gallery, different for a restaurant located next door, and yet different for commercial premises located in tenement houses, shopping pavilions, or in detached buildings or halls. A property lease agreement concerning a car workshop has a completely different characteristic than a lease agreement for premises which will be an exclusive jeweller's shop in a shopping gallery. Office premises have their own distinct specifics, involve completely different requirements and risks. In practice, the market has unfortunately not developed a single lease agreement template for every type of property, and many of them are exceptionally unwelcoming and opaque.   'P' for clearly formulated lease agreement commercial real estate. Some of their users wrongly believe in the magical power of inaccessible language and convoluted phrasing. We strive to clarify them, and where possible, replace some phrases with ones whose normative meaning is clear to both parties using the same language naturally. Of course, many Tenants also have their own very specific requirements, some of which are set out in the form of international guidelines that must be implemented in all concluded agreements, and some are drawn up in the form of checklists, or even non-binding guidelines. Increasingly, in our work, we encounter situations where Polish companies also decide to adopt a common policy for all their lease agreements – standardising their content. We have already completed several such assignments, with very promising results. It is not only shopping centres that set requirements; tenants also increasingly have their own policies. Standardising requirements allows for much easier business operations and also helps to reduce costs. Cont.