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Why are precedent leases so long?

Why are precedent leases so longIt is common for long-term residential leases and commercial leases to run up to 100 pages or more. This is due to the fact that the lease has to describe in detail the relationship among the parties concerned for the entire term of the lease. Different situations about what could happen to the property should be anticipated and discussed.

Issues such as repairs, renovations, also should be addressed. In the case of commercial leases, there will be complex provisions where the rent shall be revised regularly. If the lease is for a property that forms a part of a larger place, the lease should deal with things such as right to access and precisely what is and what is not being let to the tenant.

The following are the matters to which particular attention should be paid;

a)      Description of the premises that is let

b)      The easement that is granted and reserved

c)      Arrangements for repair, maintenance, etc.

d)     Provisions for payment of service charges

e)      Insurance

f)       Restrictions on the use of the premises

g)      Restrictions on sub-letting and assignments

h)      Restrictions on renovations and alterations

i)        Enforcement of covenants, and

j)        Provisions for rent and rent review

Some of these will be important in the case of commercial leases and others may be of more important for management scheme leases of flat. But all of these should be considered.

Of particular importance, is the impact of the CRC scheme. Landlords would naturally try and pass on the expenses incurred in acquiring allowances to the tenants, which the later will obviously resist. They may also try and improve energy efficiency by replacing old and inefficient plant and machinery and pass on the costs for the same by way of service charges. Tenants would obviously resist these costs. But considering the financial imperative to cut electrical consumption several green initiatives are supported by landlords and tenants. Thus, ‘green leases’ that impose obligations on the parties have become common. These are aimed at reducing energy consumption.

Photo courtesy: chicagogeek

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