Renting a premise for your business, be it an office or business outlet, may, at times, be the most expensive cost item to your business.
Despite that, business owners tend to put a rush on confirming and committing to rent once they have found their ideal/ FengShui location, without realizing that terms in the tenancy agreement may entail costs and liabilities beyond their expectation.
Noting the importance to save (a.k.a “chup”) your FengShui location soonest possible, so, here are the 5 quick (and important) Questions to ask before committing to rent, in order to save yourself from some common unwanted liabilities / risks.
1. Who will bear the legal costs?
First and foremost, check with the landlord / agent on who will bear legal costs for tenancy agreement preparation.
*This is not because legal costs will cost you an arm and a leg, this question to be first posted simply because it may save you from the effort to go through legal documents (and the Questions below) on your own.
Most often than not, you, as the tenant, will be required to pay for all legal fees and stamp duty for the tenancy agreement, but (strange enough) the lawyer will be selected and engaged by the landlord. In that case, inform the landlord / agent, you will be engaging your own lawyer to prepare the tenancy agreement (since you are to pay the legal costs and all).
If you may engage your own lawyer, Congratulations! You can now skip the rest of the Questions below and get your lawyer to do the job, explain everything in the tenancy agreement to you (in layman terms).
If that is not the case, well, then… read on.
2. Any other payment required apart from rental and deposit?
Be mindful, in commercial tenancy, it is not uncommon that you will end up paying a lot more than the “monthly rental” advertised or communicated to you.
You may be required to pay, on top of monthly rental, for GST, maintenance fees, security fees, marketing and promotional fees, cleaning fees and such other fees and charges howsoever named.
So, to avoid being caught by surprise with unknown payments, request for a clear list from your landlord/ agent on all amounts payable upon signing of the tenancy agreement and all amounts payable on monthly basis.
3. Who should open and maintain utilities account?
Next, check on who, the landlord or you as tenant, should open and maintain the water and electricity account of the premise. And, when will the premise’s utilities account be ready with supply?
Perhaps the above never concern you and all you want to know is “how soon can I move in and start my renovation works/ business?”
Well, do note that, if utilities accounts have yet to be opened and ready, you may well be given the keys to move in to a premise with no water and electricity supplies. There, you are unable to carry out renovation works or start your business, same time you need to already start paying rental.
So, always take note on the above and negotiate for rental payment to commence AFTER premise is ready with water and electricity supplies.
4. Can I terminate half-way through? How much compensation do I pay for early termination?
Commercial tenancy normally signed on fixed-term basis. In other words, tenant must rent for the full term (e.g. 1 year or 2 years) and is not allowed to terminate the tenancy half-way through. If tenant is to terminate half-way through, tenant needs to pay for compensation to the landlord.
You may be well aware to the above, being the market norm for tenancy.
It is, however, crucial to find out and confirm on the amount of early termination compensation. Mind you, the compensation amount can be varied from total sum of security deposit paid, TO total sum of monthly rental to be paid for the remaining unexpired term.
Should you require flexibility in early termination, do ensure this is pre-negotiate with the landlord before committing and signing on the tenancy agreement.
5. Can the owner terminate the tenancy half-way through?
Similarly, it is important to know whether the landlord can terminate the tenancy half-way through. And, if the landlord terminates, how much compensation (if any) does the landlord need to pay for early termination.
The last thing you want is that, the landlord terminates the tenancy half-way through after you have spent your life-saving into renovating the premise.
So, ask the right questions, get all crucial information and assess accordingly before rushing on to chup your ideal premise.
Bonus Tip!
Ask all the above questions, all over again, to lawyer who prepare the tenancy agreement (whether or not he /she is engaged by you), AND, on top, get him/her to highlight all the important obligations you have therein, before signing.
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