Every lease has two things in common, a start date and an expiry date; hence from day one your lease is ticking down to a major lease event.
Along the way there may also be several other events which you must check with such as:
- Rental Reviews
- Sales Reporting
- Outgoing budget/ audits
All of which you need to pre plan for, and more importantly the lease will set out specific time lines both parties need to meet.
Establishing a critical diagram that not only highlights these events but also sets timely reminders and action points prior to each event is essential.
Missing a critical date or action can be catastrophic when it comes a risk to your business.
Further you should be including in your critical path specific stages for planning, researching and negotiating critical events such rental reviews, lease options and lease expiry dates.
What is often overlooked is the statutory time lines and rights provided by Retail Lease Legislations, for example: early determination of market rent before exercising an option (state specific) or notice periods for a new lease.
Even though there has been legislation change to put the onus on landlords to remind Lessees of their option for a further lease term, we still get calls every week from Retailers who have missed exercising their right.
Further in QLD, NSW, and WA the Lessee can have the market rental determined before exercising their options, sadly again this nearly always is overlooked by Lessees.
- Know specifically when the notice period is to exercise your option i.e. “no sooner than 6 months and no later than 3 months prior to the expiry”
- Know your rights as to the rental for the first year of the next term.
- Research whether you in fact want to exercise your option – what are your alternatives.
- Plan at least 12 months out from your option
- Research your location and alternatives as if you were entering into this lease for the first time.
- Make specific and intentional diary reminders – create a critical path for your lease.
- Always remember that an option is your right over someone else’s property – value that right – otherwise it will be taken from you.