Completing a commercial lease is a significant step for both landlords and tenants. The process leading up to completion can at times be very stressful and more challenging than purchasing a property. It is therefore very easy for a tenant to complete a commercial lease and then store the completed lease in a safe storage place without reading or reviewing the completed lease. The tenant is usually busy, immediately following completion, with arranging the fit-out works or any other works required for the tenant’s intended use of the property. Unfortunately, this can lead to the tenant missing key dates which could prove costly.

A few key dates in a commercial lease are discussed below:

Completion Date

This is the date when the parties would date the lease, and the lease would then be deemed to be completed. The obligations contained in the lease would usually start from the completion date unless a term commencement date after the completion date has been agreed. Following the completion of the lease, the tenant would be required to pay any rent or other sums due under the lease and ensure the tenant’s covenants are complied with.

The completion date is usually the term and rent commencement date. It is important to note this date as leases are granted without specifying the term end date. For example, a lease may state that the term is ‘a term of 10 years from and including the date of this lease’. A note should be made of the completion date and if required, the term end date should be calculated and noted.

Annual Rent

Some leases contain stepped rents. Stepped rents are fixed rent increases at agreed points in the term of the lease. As an incentive for the tenant to enter into the lease, the landlord may agree to a reduced rent for a short period following completion. The dates for the fixed rent increases should be noted.

Break Date

Exercising a break clause allows (subject to conditions) the Tenant to terminate the lease on the break date. A lease may contain one or several break dates. Further, the provisions of the lease may allow a rolling break date. Generally, time is of the essence when it relates to break dates. It is therefore of paramount importance that the tenant makes a note of all the break dates within the lease. When exercising the break clause, the tenant is required to give notice. The notice itself is time specific and the last date the notice can be served should be noted. Any decisions/discussions in respect of exercising the break cause should commence well in advance of the last date the notice can be served.

Contractual Term

The contractual term is the period for which the lease is granted and does not include any period of statutory continuation. The contractual term should be for a term certain starting on the completion date or another agreed date. As discussed above, the term end date may have to be calculated.

Where the lease is contracted out of the security of tenure provisions, the term end date is of paramount importance as the tenant does not have an automatic right to renew the lease. Any renewal negotiations should take place well in advance of the lease end date to avoid the tenant having to vacate on the term end date.

Rent Commencement Date

This is the date on which the parties have agreed the rent will become payable. Normally, the date is the completion date, however, a rent-free period may have been agreed between the parties and the rent would therefore be first payable at a later date agreed by the parties. The tenant wouldn’t unintentionally want to miss the first payment after taking advantage of a rent-free period.

Rent Payment Dates  

Rent is normally paid quarterly, monthly or on dates fixed as agreed by the parties. When paid quarterly most leases have the payment dates as 25 March, 24 June, 29 September and 25 December (the traditional quarter dates). 25 December is a public holiday, and the other dates could potentially fall on a bank holiday or on a weekend. The rent payment dates should be noted to avoid breach of rent payment provisions in the lease.

Rent Review Date

This is the date when the rent review is to take effect i.e. if following the rent review an increased rent is determined, the increased rent is payable from this date. Generally, time is not of the essence and rent reviews can be exercised after the rent review date. For a tenant it is important to make note of the rent review date as the rent payable following the rent review date could be substantially higher than the rent paid at the inception of the lease.

The above is a non-exhaustive list of keys dates which should be noted by the tenant. Reminders in advance of the key dates should be set to avoid any of the key dates being missed.

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