These days, leasing a commercial facility is a huge investment. Mainly because once it’s occupied, you make additional expenditures such as adding signage that includes your business name, getting foot traffic based on your location and so forth. If you are leasing a commercial facility, it’s essential to maintain a long-term lease agreement to secure the facility. It takes time to invest the resources needed to create a specific layout design that reflects your business’ reputation and draws in the desired clientele.
Most tenants of commercial properties think a signed lease agreement is what’s required to provide security at the facility. Unfortunately, there are other avenues involved that must take place.
What you need to know about the landlord’s mortgagee
What you may not know about the facility that you’re leasing is that if it happens to have a mortgage, there are certain terms that the landlord must adhere to. In most cases, it’s required by the mortgagee (the bank or finance company) that the landlord consents with them before performing any activity on the said property.
How this can have an impact on you
Here’s what this means for you in cases where the landlord defaults on the terms of the mortgage (which does happen at times), the mortgagee may legally terminate your lease agreement (if they did not initially consent to it in the first place).
That’s why it’s essential to get consent to your lease agreement from the mortgage company – it adds more security to your lease.
On the other hand, in cases where mortgage companies have consented to lease agreements, then they are bound to honor it in most cases. In doing so, your lease agreement will remain intact and secure.
What to do in cases when there is no mortgage?
If you’re leasing a commercial property and there is no mortgage in place at the time, there could be one in the future. To secure your lease, it’s best to register the lease on the title by going through your state’s land title office. That’s alerts all subsequent parties affiliated with the property. Once the registration has taken place, your interest is indefeasible. Which sets it in place should other issues arise at another time. For example, the landlord could sell the facility, however, because your lease has been registered the new owner must honor the lease – which will have more priority than the mortgage itself. For more information, you can find instructions in your leasing kit or feel free to contact rpemery.com.au for assistance.
How to get the bank or mortgage company to consent to your lease agreement
You can get the mortgage company to consent to your lease agreement by having the landlord request that they do so by submitting a request.
Are you the landlord? What are your obligations?
The landlord should – in his or her own best interest – consent to the lease agreement that is on the title to reduce liabilities from taking place in the future.
Your obligations as the tenant
As a tenant, the best way to secure your lease is to make sure it is registered on title and has the consent of the mortgage company. Contact our office to learn more.