Commercial leasing is a fundamental component of business success. Whether it's an office space, a shop in a mall, or a warehouse, the lease agreement determines long-term business stability and costs. Unlike residential rentals, commercial leases are much more complex and detailed. They regulate not just rent, but VAT taxation, utility and operating costs (CAM charges), renovation rights, return on investment, and penalties for early termination. A poorly drafted contract can lead to business interruption or unforeseen financial burdens (e.g., if the landlord suddenly raises the rent or demands eviction).
Commercial Lease Agreements service involves qualified legal assistance in drafting, auditing, and negotiating contracts. The lawyer's goal is to balance the interests of the landlord and tenant and ensure business continuity. Legal.ge gives you access to lawyers who will help you avoid the hidden dangers of commercial leasing and sign a contract that suits your business needs.
What Does Commercial Lease Service Cover?
This service covers all aspects of renting commercial real estate:
- Drafting and Revision: Preparing an individual contract or reviewing a draft offered by the other party (especially standard contracts from shopping malls).
- Rent and Indexation: Clearly defining rent price, VAT inclusion, and inflation-linked indexation rules (e.g., annual 5% increase).
- Fit-out Works: Agreeing on who does the renovation, who owns the improvements (AC, partitions) after the lease ends, and whether these costs are reimbursed.
- Registration in Public Registry: Organizing the registration of leases longer than 1 year, which is necessary for legal validity against third parties.
- Termination Clauses: Defining mechanisms for early termination and penalties (Break Clause).
Common Real-World Scenarios
The following issues often arise in commercial leasing:
The first scenario is "Mall Rules." A tenant wants to open a shop in a mall. The mall offers a strict contract with high penalties. The lawyer negotiates to soften terms (e.g., opening hours, marketing fees).
The second case is "Renovation Compensation." A company rented a "black frame" for an office and invested $50,000 in renovation. 2 years later, the landlord terminated the contract. If the contract didn't specify compensation, the tenant loses the investment. The lawyer insures against this from the start.
The third scenario is "Force Majeure." Business stopped due to external factors, but the landlord demands rent. The contract must outline rent reduction or suspension mechanisms during force majeure.
The fourth situation is "Sale of Property." The landlord sold the building. The new owner wants the tenant out. If the lease is registered in the registry, the new owner is obliged to honor the existing contract.
Georgian Legal Framework and Regulations
Commercial leasing is regulated by:
- Civil Code (Lease): Distinguishes between rental (residential) and lease (commercial/income-generating). In a lease, the lessee has the right to derive profit (fruit) from the property.
- Tax Code: Regulates lease taxation (Income Tax, VAT).
- Law on Public Registry: Requires registration of leases exceeding 1 year.
Process and Stages
The lawyer reviews the property documentation (extract, cadastral plan). Then a contract is drafted, detailing the handover condition and party liabilities. Parties sign and (if necessary) register at the Public Service Hall. It is also important to draft a Handover Act recording meter readings and inventory.
Why Legal.ge?
A bad lease contract is a major reason for business failure. On Legal.ge, you will find lawyers who will help you establish long-term and secure commercial relationships.
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