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Tenancy Agreements (TA) are prepared by the mall landlord and can make or break your cash flow situation. Before you enter one, understanding the finer details is a must. Your signature could commit you to a monthly rent you can’t keep up with.
That is why we are sharing insider tips on how to be strategic—so, you can avoid common mistakes at the bargaining table.
6 Things you should know about your TA:
1. The big one is the landlord’s right to kick you out with 3 months notice if they decide to alter the mall configuration. This may seem like a non-negotiable clause, but it is not. You can negotiate for the landlord not to invoke this clause during the first term.
2. Personal guarantees are slowly making their way out of TAs. Do not agree to this clause as it can be disastrous in a downside scenario. Instead, offer an extra month security deposit. Always limit your liability in any agreement—never write a blank check.
3. Performance guarantees of any sort should never be on the table. It is as much the landlord’s responsibility to drive traffic as it is yours. Do not take all the responsibility onto your shoulders!
4. Repairs and maintenance costs have no market standard, so understand exactly where your responsibility lies and that of the landlord’s, if for example, a pipe suddenly bursts on your premises. Customer injuries can be in play and this is no time for confusion.
5. Most lease agreements have renewal terms that are subject to mutual agreement. Never assume this is a sure thing. You may not be able to renew, and after the first term, be saddled with an unexpected reinstatement expense. Ensure that you provision for this upfront.
6. Try to anticipate everything that might possibly go wrong. Run your return on investment analysis and manage your cash flow properly for all possible outcomes.
With Counto, you will only have the most skilled and experienced accounting team on your side, right where you need us. Get the expert financial support your business needs. Talk to us today.
