Commercial rental agreements

The rental agreement is one of your company’s most important contracts. Typically, the rent constitutes a significant annual expense. It entails a long-term financial obligation. It can tie your business geographically, spatially, and financially for several years into the future. In some cases, such as certain store types, the location and design of the rented premises are even the alpha and omega of success and survival.

As a landlord, you also have a lot at stake. You leave the lease, probably of high value, to strangers, where you can not necessarily trust that the tenant maintains the lease, abides by oral agreements, and lives up to unspoken expectations. It can be a great help for all parties, just as it can make your role as a landlord much easier if you have entered a clear rental agreement regarding business and retail premises.

Therefore, it is essential to spend resources on the negotiation of your commercial rental agreement.

Get a handle on the most important things in relation to commercial rental agreements

There is, of course, a vast difference between whether the lease is a large office domicile by an access road or a small shop in a pedestrian zone. Therefore, standard contracts are rarely a good solution for neither tenant nor landlord. The contract should depend on the lease, but some elements, such as the following, should always be defined.

Formalities

The tenant, landlord and precise clarification of the lease, are vital to get defined. It may seem superfluous, but disagreements can quickly arise about, for example, outdoor areas, signage, and room division, if it is not regulated in the agreement.

What the lease may be used for

It is crucial to have a written agreement in advance so that there are no conflicts over the use of the premises. It may also be that the tenant needs to change or expand his or her business areas. Here it is good to know in advance what is possible on the premises.

Rent and costs

These should also be carefully specified. Does the rent include electricity, water and heating, or is it charged separately? Is the rent fixed or turnover-dependent? Who is responsible for – and pays for – ongoing repairs and renovations? How is to rent adjustment handled? All these issues should be clarified in the rental agreement.

Entry into force and takeover

This can be an essential point to negotiate and get in writing because it is far from certain that the lease is ready for use and earnings from day one. Who should pay for possible redevelopment is a good idea to get clarified in an early negotiation? Delays in the takeover can become expensive for both tenants and landlords, so it is important to know exactly what will happen in the event of a delay.

The tenant’s options for subletting and relinquishment to a third party

This should also be addressed in the contract, as a lot can happen to the tenant’s business during the tenancy. It can be a big problem to hang on to a lease and rent if the need is for other or no physical premises. Therefore, it is a good idea to agree on whether subletting and relinquishment to a third party is allowed and if so, under which terms.

Terms of termination

Finally, the terms regarding termination should be clear. Binding periods and notice periods should be clearly defined, so you know where you stand.

Some of these things are regulated by the Danish Commercial Lease Act, but legal advice regarding the lease can be one of your best investments.

Get legal assistance regarding your lease

Advokatgruppen helps tenants as well as landlords – never in the same case, of course – regardless of whether it is about the drafting the rental agreement, the provisions regarding moving in, defects, maintenance, house rules, utilities, termination, cancellation, eviction and conflicts with a tenant or landlord.