Shared warehouse Lease Agreement

[greg478]

Hi There,

Our company is based out of NSW and we are looking at moving into a shared warehouse in Brisbane.

I have a lease agreement from the person wanting to lease the other half of their warehouse although I am thinking I should get something drawn up our selves.

I wonder about things like if the other business goes into liquidation will I loose all my stock? There is probably a lot of other things that could happen in which I haven't thought about.

We have agreed on a set price with no outgoings like rates, electricity, wifi internet and access to a forklift.

What are your recommendations and what sort of costs are involved in getting a shared lease agreement drawn up?

Many Thanks in advance
Greg

 

[@thelawbundle]

Hi Greg,

Not sure if this person is going to be "sub-leasing" you part of a building that they already lease, or leasing part of their freehold property to you - but if they're sub-leasing, you might just want to get in-principle approval from their landlord that they are happy for this arrangement to occur before you spend any further time and effort on this.

Of course, having a property lawyer assist with these matters is always recommended. To keep costs down, I would try and prepare a non-binding "heads of agreement" document first. This will help your lawyer provide the most useful advice. A "heads of agreement" document is basically the key terms of what you and the other party want to go in the lease (subject to a final contract being agreed to). For example: the legal name of the parties (e.g. company names etc.), proposed commencement date, a sketch plan of the leased area, lease term, cost, how and when the cost might increase (e.g. will there be an annual rent increase?), access arrangements, hours of operation, what you're permitted to do, what they must do, what they must not do, what events might happen that would allow you to terminate the lease, how the outgoings will be paid (e.g. will the other guy pay and then you reimburse once they've provided you with evidence that they've paid) etc.).

Once you have all of that information, your lawyer is likely to be able to point out some key risks and suggest ways for you to try and avoid those risks. You can use the Lawtap service (here) to find a QLD property lawyer who might offer you a first free consultation to discuss your "heads of agreement" and what they propose that you do. You may also find a fixed-fee lawyer. Fixed-fees are difficult in these situations because lawyers can't guarantee how much negotiation will occur between the parties (that's what takes the time and costs the money) - but if you have a heads of agreement already agreed in-principle between you, it becomes a lot easier for the lawyer to price. So you might get a quote for "preparing a lease and responding to 2 rounds of negotiation (e.g. where your lawyer addresses the other side's requested changes)". During an initial consultation with your lawyer they should be able to give you a rough estimate for this.

Edit: I note from his previous posts on this forum that Rob may be a good person to speak to about these matters.

All the best.

 

[Rob Legat - SBPL]

If you've got a general agreement as to terms between you, you can probably proceed directly to getting a lease/sub-lease drawn up.

Given it's a warehouse, it's unlikely this will be a Retail Shop Lease (RSL) - but that avenue needs to be considered. If it is, there are extra hoops to jump through, time periods, and some of the below information changes.

The 'standard' non-RSL process in this type of situation involves (item 1 only applies if this is a sub-lease situation):

1. Consent from the owner (head lessor) - if who you're dealing with is not the owner. This is vital, as a sub-lease involves with a 'parting of possession' and is often a breach of the existing lease. Consent needs to be obtained before entering into the sub-lease.
2. The lessor (or their solicitor) draws up the lease document for your consideration.
3. You seek advice on the lease terms and negotiate any changes.
4. As well as the terms themselves, consideration needs to be given as to whether additional steps are needed, such as registration of the lease, and mortgagee's consent.
5. You'll probably be liable for certain payments in accordance with the terms of the lease. Commonly, this means: the landlord's legal fees for drawing the lease, registration costs, mortgagee's consent fees, survey fees (where necessary - usually necessary if lease is to be registered).

In addition there will be your legal fees for obtaining lease advice.

Ballpark fees on a very rough estimate/educated guess:
- Legal fees: $1650 - $2750
- Lessor's legal fees: Same again or a bit more.
- Registration fees: $222.00
- Mortgagee's consent fees: up to $500.00
- Survey plan fees: No idea. Few hundred at least.