Entering into a lease — what a tenant should consider

Key considerations for a tenant before entering into a lease

Before entering into a lease, a tenant should ensure that:

• the premises (and the building containing the premises) are sound;
• the required services will be available to the tenant during the term of the lease;
• the premises can be used for the permitted use (see Use the premises for the permitted use);
• any obligations to spend money/do work are capped in the lease; and
• it is clear as to when the lease is binding (the tenant should not incur any costs, eg fitting out the premises, before the lease is binding).

Tenant’s due diligence before entering into a lease

Before entering into a lease, it would be prudent for a tenant to:

• carry out a title search of the premises;
• have the air-conditioning and other services checked by an appropriate professional to ensure they are operating properly;
• obtain a building inspection report;
• obtain an inspection of strata/community records and review the registered by-laws, if the premises is part of a strata or community title scheme;
• check the zoning and use approvals to ensure that the premises can be used for the permitted use;
• enquire with other building occupants if there are any issues with the building; and
• review any tenancy fitout guide and provide it to the fitout contractor (ideally before any quotes are provided).