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Lease Cost Elements
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Real Estate Series
Guide to lease - commercial property


Commercial Real Estate

This is an exploding field, with millions of square feet of Office, Retail , Malls, Resorts space is being realising into the market and bring vast acreage under housing sector like Open Plots, Row Housing, Apartments, Stand alone bungalows. Apart from above special and specific real-estate requirements for Telecom, Software, BPO’s, SEZ needs are growing. Continue ....

To acquire property for various purposes we need to be diligent right from the firming up the requirements, scouting, negotiating, and concluding deal and documentation. The investment that goes in the lease property too will be huge and can not be altered at frequent intervals.

As the property is aging, changing hands and being technologically updated constantly, changing in local laws. Each property and facilities needs value addition and all have critical terms expiration triggers, and potential changes in contracts, cost, legal terms and conditions
must be abstracted and managed.

With many years of experience in real estate acquisition , legal , and management and part of changing trends from acquiring of huge tract of contagious horticultural lands, high end commercial property, housing space to assortment of utility and communication infrastructure space leases, rights-of-way and municipal permission. This is a sub-specialty for us, the proverbial "briar patch" into which we are happily thrown. You'll see. You'll
breathe easier knowing this complex matter is in professional hands.

We have the right team to support in terms of acquisition, negotiations, vetting of title deeds, drafting of agreements, due diligence and abstract of lease. Every activity is handled by a specialist and experienced professional.

We advice to our clients to engage professionals for engineering, operations and maintenance of the lease property and sourced them on good references to avoid unnecessary lease administration issues.

Leasing of property is being complex matter one needs to understand various legal aspects to structure clear and unambiguous lease deed. We present comprehensive yet in summary manner the points to be consider while taking on lease any real estate property.

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Lease means: A contract granting use or occupation of property during a specified period in exchange for a specified rent.

Lease Services

  • Real Estate Sourcing,
  • Location Summary Report
  • Title Vetting
  • Lease Negotiations
  • Lease Financial Analysis
  • Lease Deed Drafting
  • Lease Documentation due diligence
  • Lease Abstract
  • Lease File organisation
  • Lease Rental Administration.
While negotiating the lease we need keep in mind the following main elements of cost, these cost will have substantial effect on cash outflow as operating expenses

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Lease Cost Elements

  • Rent
  • Deposit
  • Escalation of rent
  • Paid parking
  • Maintenance
  • Backup power
The Lease Deed is a document evidencing the landlord and tenant relation. The lease deed to be drawn appropriately covering every negotiated term and conditions. Any lapses may lead to misunderstanding and operational issues and hindrance in fully enjoyment of the property for which it is intended. Therefore it is always advised to keep following check list while negotiating and drafting the lease deed. These points need to be detailed in the Lease Deed

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Lease Deed - Elements


Parties Names, *Age, Addresses
Lessor
Lessee

Property address
Property ownership brief
Approvals for building
Purpose / use of premises


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Lease Terms and Conditions

  • Duration months
  • Commencement date
  • Termination
  • Rent
  • Escalation
  • Deposit
  • Refund of deposit
  • Taxes Income (TDS)


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Utilities/Facilities

  • Electrical Power
  • Backup Power
  • Water
  • Sewage
  • Lifts
  • Common area lighting
  • Security
  • Parking (4W&2W)
  • Common Parking
  • Paid Parking
  • Free parking
  • Maintenance
  • Garbage disposal
  • Communication Antenna on roof top
  • Earthing
  • D.G space
  • Sign board
  • Air condition ducting
  • Air condition outdoor unites placement
  • Fire fighting facilities
  • Emergency exits
  • External building up keeping:
  • Colouring
  • External Walls Cleaning
  • Glass panels
  • Repairs
  • Legal Conditions
  • Property taxes
  • Sub lease
  • Inspection of lease premises
  • Right

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Legal Condition


  • Property taxes
  • Sub lease
  • Inspection of lease premises
  • Right of way for cables/ Mortgages
  • Assignment
  • Transfer of ownership
  • First right of refusal
  • Assurances
  • Lispends
  • Notice
  • Indemnity
  • Force Majeure
  • Insurance
  • Stamp duty & Registration
  • Arbitration
  • Jurisdiction of way for cables/ Mortgages
  • Assignment
  • Transfer of ownership
  • First right of refusal
  • Assurances
  • Lispends
  • Notice
  • Indemnity
  • Force Majeure
  • Insurance
  • Stamp duty & Registration
  • Arbitration
  • Jurisdictio

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Legal Note

Minor’s property - restrictions to deal and remedies

Who is a minor?

Minor means any person subject to Indian Majority Act ( 9 of 1875), Section 3, who has not attained his majority within the meaning of that Act, and any other person who has not completed the age of eighteen years, and “ minority means the status of any such person.

Section 3 of Indian Majority (Amendment) Act 1999 Age of majority of person domiciled in
India. (1) Every person domiciled in India shall attain the age of majority on his completing the age of eighteen years and not before.

Major Acts effecting minor:
        ˜ Indian majority Act
        ˜ Hindu Minority and Guardianship Act
        ˜ Guardians and Wards Act

Section 8 of the Hindu Minority and Guardianship Act 1956.

It imposes restrictions on the power of the natural guardian to sell, mortgage, exchange, give lease exceeding five years or beyond one year after attainment of majority.

Section 9 of Guardians and Wards Act 1890

Grant of court permission to the guardian to do above acts. As we see that restrictions on minor’s property are by virtue of enactments, one should deal with such kind of property with great caution and after having necessary permission from the court.




                   IPR Copyrights

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