Agreements to Lease

When renting business related property, it is important for both landlords and tenants to understand the relationship they are entering into and the rights and obligations that they each have, the document that governs this relationship is usually a Commercial Lease.

A Commercial Lease gives the tenant an immediate right to take possession of premises and occupy those premises to the exclusion of all others, including the landlord or owner.

An Agreement to Lease is used prior to a Commercial Lease being signed in circumstances where there are things to be done before the landlord can give the tenant exclusive possession of the premises.

An Agreement to Lease documents each party’s rights and obligations and sets down all of the requirements that have to be satisfied prior to the terms of the actual Lease taking effect. 

An Agreement to Lease can be very useful for both landlords and tenants and it is important to understand the relationship being entered into and the rights and obligations of each party.

An Agreement to Lease is often used when:

  • the tenant needs to obtain consent from someone, say for a particular use of the premises
  • the premises are being purpose-built for the tenant; or
  • an existing building is being renovated before the tenant moves in; or
  • the current tenant may be moving out but has not given up possession, often the case in shopping centres.

Completion of the works, fit out, consent or delivery of vacant possession is usually taken into account to set the start date of the Lease.

The Agreement to Lease will usually have a copy of a draft Lease attached to it so that the terms of the Lease are clear to the parties and agreed from the outset.

The terms of the Lease should be reviewed by your lawyer before an Agreement to Lease is signed.

Tim Hayter, Principal, Mid West Lawyers

This information is general in nature and should not be relied upon as legal advice. Formal legal advice should be sought for your particular circumstances.