Friday, 10 October 2014

Glenn Duker, Lawyer and Solicitor, Discusses Sublease Issues

Commercial leases are often expensive and tie you into a daunting long-term commitment. This can be prohibitive, especially for smaller businesses. Sub-leasing can represent a solution, as long as it’s carefully organized and documented. This is where the experience of Glenn Duker, lawyer and solicitor, can come in handy.

Subleasing is the lease of all or a portion of premises by a tenant who has themselves leased them from the owner. Some agreements expressly prohibit this, or at least require permission from the owner first;don’t ever agree to a sublease before you are sure of conditions of the original lease agreement. If you are the original tenantintending to organize a sublease, keep it firmly in mind that you’re still responsible to make rent payment to the owner through the term of the original document.It’s so important to make sure you have adequate protections in place to cover you if things go pear-shaped!

Sub-leasing can be a boon not only to boutique businesses, but also to larger companies that find themselves with surplus space thanks to restructuring. In this situation, sub-leasing can offer a more (cash-flow) positive alternative to writing off the costs of vacant capacity, but it can also be complicated.

Some possible drawbacks that should be considered before entering into a sub-lease:
  • This rental arrangement often means you have less control over the way you can use the space, thanks to the conditions of the original document. This may inhibit how you can present and brand your business.
  • Any negotiations may become a three-way (at least) affair between you, the sub-lessee, and the original owner.
  • Make sure you are very aware of what your sub-lessor’s business is and be sure that it won’t interfere or clash with your own.

For further advice on these issues, contact Glenn Duker, lawyer and solicitor.

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