Minbo Wang

Lawyer, storyteller and nerd

Hi, I'm Minbo!

I'm a lawyer, storyteller and nerd. I work with SMEs and high net worth individuals. I like sharing stories from the law, history and the topics that interest me.

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As a backup against the tenant’s ability to pay rent the landlord often requires a bank guarantee or security deposit in an amount equal to 3 to 6 months rent. Typically the bank guarantee will have an expiration date. Generally, the landlord will request that the expiration be 3 to 6 months after the expiry of the lease. This is to allow them to make a claim in the event there is a breach of the terms of lease as you exit the premises. The terms of the lease may provide that a new bank guarantee must be provided as rent increases annually under the lease. This can be a hassle so if possible negotiate a fixed amount for the bank guarantee so that it does not need to be switched out every year. #security #bank #business #legal #leases
What you can use a leased premise for depends on the terms, in particular the term called permitted use. For example, the permitted use might be “restaurant”. So you can run a restaurant on the premises but doing anything else is a breach of lease. It is important to use words with a broad definition for permitted use. For example, the word “restaurant” might not include the sale of alcohol. So a description such as “food and beverage” is a more expansive description and offers more opportunity for business expansion. Broader words may also allow you more room to sublease part of the premises or assign the lease more easily. A permitted use of “Japanese restaurant” might work now but if you ever need to assign the premises it will become restrictive for potential people you can assign the premise to. # #business #restaurant #foodandbeverage #lease
Sometimes you lease a property and you do not need all of it or in a downturn in the economy you find that you may want someone to share the rent. Subletting is when you lease part or all of the premises you lease to someone else. That someone else will pay you but you are still responsible to the landlord for rent and what happens on the premises. It is important to check your lease if you wish to sublet because sometimes you require the landlord’s consent to do so. #property #business #legal #sublease
Many leases will give the landlord the right to terminate the lease if you fail to pay rent or follow any of the other obligations under its terms. This can have very serious consequences including that the landlord can take back the premises and the possibility if the landlord cannot find a tenant that you will be liable for rent for the rest of the term of lease. Thus if possible you should seek to amend the lease (if applicable) to require your landlord to give you notice of any breach of the lease and allow you to rectify the breach before terminating the agreement. For example, you may forget to pay rent on time, with such a clause the landlord must give you notice of the failure and during this notice period you can pay before they can terminate the lease. #business #legal #leases #negotiation
Many new businesses prefer a 2 year term with two options for 2 years each while more established businesses often decide on a 5 year term with an additional term of 5 years. A 2 year term reduces the risk to new businesses if they do not do well. Shorter terms are possible but it can be hard to make back the capital invested in the businesses. If the business succeeds the lease can be extended for a possible additional 4 years. However, as rent is reviewed normally by the market rate between options the rent in the 2 options may be significantly higher. On the other hand established businesses may not require an experimental or prototype phase. A 5 year lease provides stability and continuity. Further, since normally rent is normally reviewed yearly on a CPI or fixed fee basis there can be significant savings. In addition, in longer leases the landlord is sometimes willing to give incentives such as fit out contribution and/or rent abatement. It is also important to negotiate how options are exercised. Generally, the lease will require you to give a certain amount of notice. A period between 3 months and 6 months is common though more is not necessarily unusual. Obviously, the less notice the better so that you will have more time to consider your options. #business #legal #lease #negotiation
You should: 1. do your research on market rent for similar businesses in the area you are leasing as this will help you to negotiate a fair rent for your lease; 2. explore options for calculating yearly increases in rent, as many leases include such terms, which could be: (a) fixed percentage increase every year usually around 3% to 5% though this may vary; (b) CPI increase depending on inflation usually around 2% to 4%; and (c) market review will be much more variable but is usually higher than either fixed percentage increases and CPI increases, 3. negotiate whether you will be responsible for outgoings, that is either if it is net rent (not including outgoings which you must pay in addition to rent) or gross rent (include outgoings which landlord will cover); and Outgoings are the landlord's costs of operating and maintaining the building including government rates and taxes. 4. if required by the landlord to discuss whether turnover rent is to be paid, that is a percentage of the sales of your business. #business #negotiation #legal #leasing
Whether your lease is a retail lease or commercial lease is determined in NSW by Schedule 1 of the Retail Leases Act 1994. If a business is not on the list then it is a commercial lease. Each Australian state and territory's law on retail leases is different. These laws give additional rights and protections to tenants and impose obligations on landlords. Retail business include: (1) amusement and entertainment services (2) beauty shops (3) convenience food shops (4) electrical appliance shops (5) florists (6) game and hobbies shot (7) greengrocers (8) hardware shops (9) internet cafes (10) key cutting shops (11) lottery agencies (12) martial arts supplies shops (13) news agencies (14) optometrists (15) pharmacies (16) retail post offices (17) supermarkets (18) travel agencies and others.

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