The Leased Premises

What is the legal description of a premises?

The legal description of the premises refers to how the property is identified in real estate legal transactions. The description can be found in a deed, mortgage, or other purchase document or may be obtained from a county recorder, land titles office, tax assessor, or other similar official.

What are fixtures?

In real estate terminology, the word "fixture" refers to a piece of property that is sufficiently attached to the Premises so that to move or remove it would damage the property. If the attached part of the property can be removed without significant damage to the property then it is usually not considered a fixture. Examples of fixtures may include built in cabinets, sinks, toilets or wall-to-wall carpeting.

What are chattels?

Chattels are personal property They are distinct from real property or real estate in that they can be moved from one location to another. Examples of chattels may include blinds or curtains, microwaves, refrigerators, desks and personal computers.

What are leasehold improvements?

A leasehold improvement is an expense incurred for the permanent improvement to the leased property They are considered fixed assets and depreciate in value over the period of the lease.

How is the tenant allowed to use the premises?

The tenant can only use the leased property for purposes that have been approved by the Landlord. The "permitted use of premises" clause limits the tenant to only engage in certain types of business. Before allowing the tenant to use the property for additional purposes that are not stated in the Lease, the tenant needs to obtain the written consent of the Landlord.

The Lease Term

What does "Automatic Renewal" mean?

Automatic renewal means that the lease continues indefinitely on the agreed upon period (weekly, monthly, or yearly) until either the tenant or the landlord gives notice to the other party that they will be terminating the lease.

Which lease term should I use?

United Solicitors allows you to choose from several different types of lease terms:

● Fixed End Date

A lease with a fixed end date gives certainty of term for both the landlord and the tenant. It specifies the exact day the tenancy will end. The advantage here is that neither party has to give notice to terminate the lease, it simply ends on the specified date. In a fixed end date lease, the landlord cannot increase the rent, or change any other terms of the lease unless he specifically reserves the right in the lease, and the tenant agrees to the changes. If the tenant remains past the specified date the landlord can either: (a) accept rental payments and have the lease continue as a month-to-month tenancy with the same rules as the expired fixed end date lease; (b) sign a new lease; or (c) start eviction proceedings against the tenant.

● Fixed Number of Weeks/Months/Years

A lease for a fixed number of weeks/months/years gives a start date for the lease and the number of weeks/months/years that the lease will run (for example: the lease could start on September 1, 2005 and then continue for a period of 18 months). The advantage here is that neither party has to give notice to terminate the lease, it simply ends on the specified number of weeks/months/years. In a fixed term lease, the landlord cannot increase the rent or change any other terms of the lease unless he specifically reserves the right in the lease, and the tenant agrees to the changes. At the end of the specified period, the landlord can either: (a) accept rental payments and have the lease continue as a weekly/monthly/yearly tenancy with the same rules as the expired fixed end date lease; (b) sign a new lease; or (c) start eviction proceedings against the tenant.

● Periodic

A periodic tenancy (a weekly/monthly/yearly lease with automatic renewal) will continue until one of the parties terminates the lease. To terminate the lease, the landlord or tenant must give notice of their intention to terminate as specified by statute. A landlord can usually raise the rent, or change the terms of the lease in these types of agreements by providing proper notice as required by statute. At the end of the notice period the tenant must move out or the landlord can start eviction proceedings against the tenant.

When is rent payable?

Rent is usually payable quarterly in advance on the usual quarter days: 25th March, 24th June, 29th September and 25th December. However, there is nothing to prevent a landlord and tenant agreeing to other dates for payment of rent.

What is "Base rent"?

Base rent refers to the minimum or base amount of rent as set out in the lease excluding percentage rents or any other additional or operating costs.

What is a "percentage lease"?

A percentage lease refers to a specific type of rental arrangement that applies mainly to retailers, especially in shopping centers or multiple-tenant malls. In a percentage lease, the tenant pays a fixed or base rent plus a percentage of gross income. To create this type of rental arrangement, have the tenant pay "Base Rent plus % of Gross Profits".

What are "FRI leases"?

An FRI lease means a full repairing and insuring lease where all costs of maintenance and repair and the cost of insurance (whether insured directly or through the Landlord) are met by the Tenant.

What is a Gross rent lease?

A Gross rent lease is a type of commercial lease where the tenant pays the base rent and any specified expenses with respect to the Premises and the landlord pays all other expenses associated with operating and maintaining the property. Operating expenses may include insurance, utilities, maintenance expenses and sometimes taxes.