Office Lease Agreement - What to Consider in Negotiations

Unlike residential properties, there's no legal protection for tenants in commercial lease agreements to prevent overly disadvantageous clauses. The legislature grants 'merchants' extensive freedom of contract regarding the content, form, and termination of the lease agreement.

Commercial lease agreements often have lease terms spanning several years, making it crucial for tenants to actively contribute to the lease agreement's design to prevent disadvantage.

Here are some of the key points to consider when drafting a lease agreement:

Lease Term

Lease agreements with shorter terms (typically one to three years) offer the advantage of greater flexibility for companies planning rapid growth. If a favorable offer presents itself, it's worth considering entering into the longest possible term agreement.

A compromise solution is a fixed-term contract with a shorter duration combined with an option clause. This allows for the possibility of extending the contract under the same conditions for the option period, typically three one-year options after the initial term of, for example, two years.

Subletting

For dynamic companies, the option to sublet part or all of the space can be beneficial, allowing for growth into the space or cost savings during periods of slower growth.

Ideally, secure the right to sublet from the landlord in writing in the lease agreement beforehand. If there's no subletting clause in the lease agreement, and the landlord does not permit subletting, there's the option to terminate the lease agreement with the statutory notice period.

However, if the landlord explicitly excludes subletting from the outset in the lease agreement, it will be more challenging to negotiate this right later on.

Assignment Clause

Equally important is including an assignment clause in the lease agreement if you wish to terminate the contract early. Pay attention to the wording.

Ideally, the tenant should have the right to nominate a successor who pursues the same or a different contractual purpose, and the landlord should agree unless there are important reasons against the proposed successor. This helps avoid lengthy discussions with the landlord, thereby prolonging the search for a successor.

Deposit

Landlords typically require a deposit. Unlike residential tenancy law, there's no legal regulation governing the amount of the deposit; it's freely negotiable.

Our tip is to include a written provision in the lease agreement specifying where the deposit will be deposited. It's advisable to deposit the deposit into an open trustee account, ensuring protection in the event of the landlord's insolvency and excluding the banks' lien rights.

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