Transfer procedures in the leasing of commercial properties
In commercial properties, the handover of premises is a critical time to take note of important issues and matters that require attention. These notes can then assist the tenant or landlord in any matter of discussion or dispute. There is a delivery and the beginning of the occupation and again at the end of the occupation.
In all respects, the tenant’s occupancy and delivery of the premises must be in accordance with the lease. This says that you, as a property manager or lease, must read the lease and understand it. Even in a single property with many different tenants, lease agreements can and usually are different. The ‘offset’ clauses and ‘transfer provisions’ of the lease are unique and must be understood in relation to each lease.
Taking photos is also part of the documentation of the facilities at the time of delivery. It is recommended that photos taken have the date and time stamped on the camera, and that photos are subsequently saved as ‘gif’ files and not ‘jpg’ files. This is because ‘gif’ files are a more stable and fixed format that cannot be manipulated by software editing tools such as ‘Photoshop’. If you want the photo to be evidence of something important, then the ‘gif’ format is a reliable option.
While every lease is unique, let’s set some ground rules to give you some benchmarks to work with at delivery. You can then add a few other items that may be applicable to the location or property you work on.
- Take photos in ‘gif’ format as evidence of important things and presentation levels
- When taking photographs, it pays to put a scale reference, such as a ruler, on the image.
- Make notes of any comments or agreements made by either party to the lease.
- Check all walls and painted surfaces for damage or current condition, taking photos as appropriate to record current condition
- Check roof shingles and T-bars for roof presentation and integrity
- Look over ceilings to successfully remove any unnecessary wiring that should have been removed.
- Check all floor coverings for damage or deterioration beyond normal “wear and tear”
- Look for any floor or wall penetrations that exist or need to be repaired and note that any penetrations must be fire rated per local building code standards.
- Check the operation of the air conditioner and note any need to balance the air conditioner due to altered or installed equipment or partitions in the leased space
- Check lights and light switches to see if they work and are safe. All tubes in light fixtures may need to be replaced as part of the repair provisions of the lease.
- Check all doors and locks for safety and security. Don’t overlook the need for doors and locks to meet all building codes. All door keys must be provided or returned as appropriate. If a master key system is installed in the building, verify that all keys comply with the master system
- Check the windows to see if they work, protect and protect
- Verify the electrical supply to the tenancy and any measurements of the energy consumed
- Verify the installation and compliance with any local signage and that it is in accordance with the architectural standards established for the building.
- Look for any issues of change in the structural integrity of the building and facilities.
- As part of the verification process, it is sometimes worthwhile for the owners’ contractors to inspect the premises and provide a full report of any complex or sensitive issues. This will support any subsequent legal dispute over the correct terms and conditions.
When keys are exchanged between the tenant and the landlord, or between the landlord and the tenant, a receipt must be obtained as proof of the delivery of the keys. The actions of the real estate agents in the delivery to any tenant must also be supported by notes. It is surprising how many disputes arise later, when you least expect it; in such a case, your notes are invaluable.
Never return bail money or bank guarantees to tenants until you are absolutely certain that all requirements of the lease have been met. It should also be noted that all compensation must have been made before the expiration of the lease; it is not something that is done after the expiration of the lease.
Efficient repair and delivery procedures are a critical skill for the realtor to develop and implement in every leasing situation.
