Lease Contracts and Lease Renewals form significant obligations (operationally, contractually, and financially speaking) to those companies and individuals entering into such agreements in South Africa. They need to be managed correctly as there could be significant consequences if not done so.
Need to be correctly and professionally drawn up to reflect the wishes of all parties.
Need to be managed for the duration of the Lease Agreement to make sure all aspects are carried out.
Need to be clearly defined in the original rental agreement.
Usually, need to be acted upon before the termination of the original lease agreement.
30 Factors that one should be considering BEFORE one enters into a lease contract for industrial premises:
- Precisely what is being rented? Factory/ Warehouse, offices, yard areas, etc
- Also, are there any areas shared with other users? (e.g., Shared yard areas).
- Rentable area of premises. The most commonly used formula is the SAPOA Method of Measuring Floor Areas.
- The exact use of the premises and facilities.
- Date of Occupation of the Premises.
- Lease start date.
- The period of Lease.
- Lease End Date.
- Annual rental escalation.
- Deposit required.
- Renewal period and terms & date to be complied with for Renewal to be Valid.
- Initial Rental. (Excl. Vat)
- What other initial costs are to be paid by the Tenant? (e.g., Security, Operating Costs).
- Including how/ when these costs escalate.
- How are consumption charges (e.g., Electricity, Water, Sewerage, etc.) calculated and billed?
- Suretyships (if applicable).
- Any individual/ additional requirements requested by the Tenant?
- Tenant’s legal entity to prepare all FICA documentation required by Landlord.
- Also, the Tenant will likely be needed to consent to a credit check by the agent or the landlord.
- Resolutions when companies or trusts are legal entities.
- What are the Lease/ Administration costs charged for drawing up the contract?
- Power requirements?
- Height/ stacking and racking requirements.
- Fire regulation compliance (e.g., Sprinkler systems, etc.).
- Loading, parking, paving, and turning circle requirements. (e.g. turning circles for interlink trucks are essential).
- Flooring and lighting.
- Importantly, staff facilities.
- Also, the timing of a move from previous premises.
- Finally, cleaning up of former facilities.
Epping Property can assist landlords and tenants with Lease Contracts and Lease Renewals.
Epping Property goes through each lease and highlights the relevant clauses. Most notably, specific terms often seem innocuous but “come back to bite one” in the future.