Wow! Finally, I have the ability to rent a shop! I can start a business now!
Some people may get overwhelmed with joy at such moments and may become especially careless when signing contracts. So today, I’ve compiled a few things to pay attention to when signing, here are 8 items you need to look out for in the Terms & Conditions :
1. Is there a Late Penalty clause?
Some landlords may include this in the lease to prevent tenants from paying rent late. Usually, rent is due within 7 days, for example, if the lease starts on the 1st, you must pay the rent by the 7th. If delayed, the landlord has the right to charge you a penalty!
2.What is the Penalty for early termination?
Most landlords will typically forfeit your deposit, but some may add compensation for the remaining rent in the lease. For example, if you signed a 2-year lease but decide to terminate after one year, you may have to compensate the landlord for the remaining year’s rent. If you can’t pay, the landlord has the right to pursue legal action.
3. How much notice is required for lease renewal?
Usually, 2 months notice is required in advance.
4. If there is a lease renewal, what’s the increment rate?
Some landlords may state that it should follow the market rate, while others may specify a percentage or even a fixed amount. The percentage typically ranges from 8-15%.
5. In case of termination, how soon can the deposit be refunded? Or under what circumstances might the landlord withhold our deposit?
The deposit will be returned to you after the landlord inspects the shop. However, if you have outstanding utility bills or property damage, the landlord may deduct these costs from your deposit.
6. Is subletting allowed? As known as renting to someone else.
Strictly speaking, it is not allowed. If you need to do so, you must first obtain the landlord’s permission and prepare a Letter of Consent explaining the tenant’s details including business and tenant’s name.
7. Clarify the landlord’s responsibilities.
You can refer to the Landlord Covenants in the lease, where it will be outlined. For example, the expenses the landlord is responsible for, such as property tax, land tax, and maintenance fees, as well as areas the landlord needs to maintain, such as leaks, exterior walls, roof, etc.
8. If the landlord decides to sell the shop, do you have the right of first refusal?
If the landlord intends to sell the shop, check if the landlord has provided you with the right of first refusal.
Finally, let me give everyone a little knowledge. Usually, the Fire Insurance that homeowners buy is only for the building. The furniture inside is not included. If you have valuable belongings or furniture, remember to buy insurance for them separately.
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