Critical dates within a commercial lease refer to the dates by which you must exercise an option, respond to a market rent review and other such important dates.
We’re often asked if these dates are that important and the answer is always a resounding YES!
Why are they so important you ask? Does it really matter? What could possibly go wrong if you miss one? We’ve seen many examples over the years, where tenants have come to us seeking assistance because they’ve missed a critical date.
Here are our top three reasons why you should mark your commercial lease critical dates in your calendar now!
1. Exercise of option . Your lease will include a ‘not before’ and ‘not after’ date for exercising your option (extending your lease). If you do not exercise your further option within these time frames your Landlord is not obliged to provide you with the further lease term. This will mean they can provide you with notice to vacate or have you renegotiate a new lease at possibly a much higher rental.
2. Market rent review. Whether it’s a mid term market rent review or at the commencement of a new lease term, your lease will probably have a clause relating to the process for agreeing to a new rental amount. The clause will generally have a time frame by which one party must respond to the other – accept, reject or attempt to negotiate the new rent. If you miss this time frame then the consequence can be that you end up paying a much higher rental amount than you should, as you did not object to the rental proposed.
3. Time to research the market. A lot of Tenants get caught out by not being aware early enough of their critical dates, resulting in impromptu and spur of the moment decisions. Knowing well in advance when your critical dates are will allow you enough time to thoroughly consider your options, research market rents or look for alternative properties without feeling time pressure.
How do you find out what the critical dates are within your commercial lease?
The critical dates within your commercial lease won’t usually be documented for you. You will need to read through the clauses within your commercial lease to identify them. These will be noted under clauses referencing “options”, “renewal” and/or “market rent review”. Take a look in your lease and mark them on your calendar now. If you need some help identifying these all important dates, please contact us and we can assist you – 1300 266 314 or email firstname.lastname@example.org