What is a business lease? A business lease (also known as a Business Lease Purchase) is a simple contract agreement that it is used for business automobiles. Like with a private purchase, you’ll have to pay for a down payment prior to the signing of the contract, and usually the term of the lease is from a year to five years, with the option to extend the contract if required.
It’s a great option for those who want or need a vehicle but are on a tight budget. A business lease gives the business owner the ability to use the vehicle as they see fit. The business owner will still need to cover all expenses incurred with the car, which could include maintenance costs or gas expenses.
Unlike purchasing a car from the dealership, a business lease is much less expensive. For this reason, many companies that run successful operations in their own garage tend to arrange their own financing through a bank or other lending institution. Once the contract has been established, it’s legally binding contract. Since it establishes mutually beneficial arrangements between both parties, the business owner is well protected if the business fails due to circumstances beyond their control.
Some agreements will outline the details of the contract such as the amount of money the landlord is entitled to and the amount of interest he must pay. Other details may be left to be determined by the parties. For example, some leases may set the schedule for when maintenance or capital improvements will be completed. All these details will be outlined in the document. Generally, most landlords require a one or two day notice period for any scheduled work.
Rentals and alterations are a two-way street, and both the tenant and landlord must seek professional advice before embarking on any changes. Tenants should seek out independent estimates and proposals for repairs from qualified professionals in the field. They can obtain this information by asking local building authorities, contractors, business owners and trade bodies. Landlords should also ask for a written proposal from the tenant and keep all records pertaining to negotiations. This will ensure that there is no misunderstanding of the obligations of both the tenant and the landlord.
Leases vary greatly depending on the tenant’s requirements. For instance, if the tenant wants to sublet the premises, the landlord must consider how much space is actually necessary. Usually, a business will only need a small portion of the office or commercial premises for its everyday operations. If a restaurant has a large space requirement, then it could well take up more space than a normal business.
Landlords also have to take into account any lease terms or conditions with regards to exit routes, deposits, capital improvements, liability, appliances, advertising and any terms relating to the sale of property demised. These factors must be carefully reviewed by the landlord and tenant before entering into any agreement. The landlord can only terminate the agreement if certain conditions are not met; if the tenant does not comply with these terms and conditions, the landlord must then give the tenant notice that they have done so.
A pre-arranged exit route clause is commonly included in leases to protect both parties. If the tenant wishes to vacate the premises prior to the end of the lease term, the landlord must allow for this. Usually, a pre-arranged exit route clause requires the tenant to pay an exit fee to the landlord in the event of them leaving the property, with the amount of this fee determined by the market rent at the time of the termination.
However, it should be noted that just because a pre-arranged exit route is in place, this does not mean the tenant will be evicted. Instead, the tenancy may be extended where the landlord agrees to waive the exit fee, in which case the exit route clause will be of no use.
Payment terms are another common feature among commercial leases. Commercial leases generally require landlords to pay for the first year’s rent, as well as a one month deposit followed by monthly deposits for each quarter. Some property owners also require tenants to pay a one time application fee, as well as a one time administrative fee. Also common are provisions for the landlord to deduct this fee from any future rent payments. Other important terms that may be covered include property insurance, taxes, insurance coverage, damage and upkeep, preservation charges and inspections.