Know Your Clause
“Tenants, do you know that understanding the clauses stated in your lease document is critical to your thriving businesses at the parks? Your lease is an agreement that guides the relationship between you – the tenants; and e TecK- the landlord, therefore operating within these terms and conditions means less stress for both parties. Many times tenants may not be even aware that they are in breach because they have not reviewed their lease documents in detail; intimate knowledge of your lease document is key. Unfortunately, a breach can lead to the forfeiture of your lease but this can be avoided if the correct procedure is followed.”
“Know Your Clause” is a new segment to promote greater awareness and understanding of critical clauses found in tenants’ lease documents. Over the next few months, we will be highlighting clauses such as: – User, Additions, Alterations and Reconstruction, Assignment, Use of the Common Area and many more. We have already focused on the following:
This month we focus on the Rent Review .
Q.1. What is a Rent Review?
A.1. Each Tenant will be in possession of a Lease, an Agreement to Lease or a Letter of offer from e TecK. Each of these documents contains a rent review clause. Where a Tenant is in possession of a Land Lot the rent review period is five (5) years. Where a Tenant is in possession of a factory shell the rent review period is three (3) years.
A rent review is simply a review which takes place of the rental by the Tenant every three or five years and which results in an adjustment of the rental figure based on prevailing market rates but not being less than the rent for the immediate preceding period.
Q.2. What does the Clause look like in my Lease?
A.2. Each Lease and/or Agreement to Lease contains a Schedule called “Rent and Rent Review” or “The Rent, Additional Rent and Rent Review”. The Letter of offer contains a clause which states that the rent is to be review every three or five years (depending on the type of Lease offered) and a draft Lease or Agreement is attached which contains the full provisions.
Q.3 How is the rent review calculated?
A.3. The answer is based on a rate, which varies by geographical areas and this rate is provided by a Valuer.
Q.4. Why do rent reviews?
A.4. Rent reviews are done in order to ensure that rent payable under a lease can be varied during the term of the lease, thereby ensuring that Landlord receives the prevailing market rate for his assets.
Please call Tenants’ Hotline at 1-868-224-1970 for further information on your Lease agreement.