A seemingly simple question that we often get from our commercial tenants and owners – when will tenants get keys to a commercial property? Whilst this may appear to be straightforward, the answer to this question varies.
On a straightforward lease, the tenant must complete the following items prior to the keys being handed over. Please see the list below:
- Deposit and security bond to be paid
- Tenant insurances to be provided
- Lease to be signed by all parties
There are some instances where it may take longer for keys to be handed to a tenant. Here are a few examples:
It would not be unusual for a commercial lease to be subject to approvals for a liquor license if you are thinking of opening a restaurant, bar, pub or café.
- Commercial properties are also able to be used for different business purposes. At times, a change of use of for the premises would cause there to be a delay in handing the keys to commercial tenants.
- If the security bond is being paid by way of a bank guarantee, there can be delays with procuring this from the bank, keys will not be handed over until this is received.
- There are times that the Owner is required to complete works on the site. Depending on the nature of the works there may be a risk involved in having others on-site or photos for a property condition report may need to be taken prior to keys being handed over.
Whatever the case may be, we would highly recommend that a binding lease offer to lease be drawn up with these specific conditions accounted for and to be signed by all parties.
While waiting for approvals, it would be good to procure all the tenant insurances and funds payable as per the signed offer to lease. Then once the approvals are received, a Solicitor should draft a lease to be signed by all parties. Only once the lease is signed, should the keys be handed over.
So, what happens if the tenants would like access to the property prior to the approvals being received?
It is highly risky for Owners to hand keys to tenants before a lease is signed. Therefore, our general recommendation is that this request is denied and that access is only given via appointment with the Commercial Property Manager.
However, if an Owner agrees to access prior to approvals being received (against our advice), then we would recommend that the Lease be drawn up immediately and signed “subject to approvals being received” as well as specifying that the access is given for quotes and planning purposes but no work on the premises should be undertaken until all approvals have been received.