Commercial Rental
Commercial rental
Unlike other countries, commercial leases in Israel are done with complete freedom of contract. This means that once the contract is prepared, all the clauses provided can be changed, added, modified, removed. This is much more convenient, but can be disconcerting if the person looking for a lease does not know Israelis. It obviously also takes a little more time, but it is worth it.
Another point that differs from other countries, contracts are generally for a minimum of two years. The reason is that the tenant must have time to amortize his costs of fitting out the premises. The date of renewal of the contract is specified in it, as are the charges and the rent to be paid which is often indexed. If there is an option its dates, the charges and the rent must also be specified.
In any case, do not hesitate to hire a lawyer to prepare the contract so that everything is legal. The contract must contain a detailed description of the activity that will take place in the commercial premises.
Define the commercial premises
First of all, you need to decide on the type of premises you want, its size, interior layout and other details. Kitchen, cellar, parking and other areas are often included in the premises. All of these should be included in the contract with their detailed description. This will avoid problems later, or requests to pay for them. It is also important to check the details of the premises in the land registry.
Another important clause is to specify what activity it is intended for. It is possible to detail the activity or not, but it is worth it in case the tenant decides to change or modify his activity.
The contract and its clauses
Being in Israel and due to the fact that certain laws are in force, the clauses in the contracts may seem strange. Most of the time commercial lease contracts are very long and have many annexes. These include every possible detail about the commercial premises, its layout, insurance policies, physical plan etc.
Types of clauses
- Contract start and end dates
- Option for contract renewal
- Monthly rent or other
- Insurance policy
- Detailed plan of the premises
- Materials permitted for additions or renovations
- Internal regulations of the building where the premises are located
- Compliance with kashrut rules for employees and customers
- Mandatory closure for Shabbat
Negotiations for the completion of the contract are made between the owner and the tenant, if possible accompanied by their lawyer.
Tenant guarantees
As the real estate market in Israel is constantly under pressure, owners or lessors will ask tenants for guarantees, sometimes exaggerated. This comes from the lack of premises especially in the center of the country around Tel Aviv. Owners want to relieve themselves of the mandatory costs and to amortize the risks of renting. This means that the owner will transfer to the tenant all the costs of work, taxes and charges of the commercial premises.
Types of guarantees
What makes the legal procedures in Israel different from those in other countries is the accelerated eviction law. This, together with simplified rent collection, provides security for landlords.
- Bank guarantee
- Promissory note
- Deposit for payment of rent
- Cashable or non-cashable security deposit check
- Checks due for annual rent in the hands of the owner
Return of premises to the owner
The details and the manner in which the tenant must return the premises at the end of the lease are detailed in the contract. If the landlord asks to return the premises in the same condition as it was at the beginning of the lease, do not accept under any circumstances. This sentence is far too general and cannot be applied in the majority of cases. For example, if the premises were a travel agency and you have turned them into a bar-café, by accepting this sentence in the contract you will have enormous costs to return the premises to how they were.
The most important thing to remember is to make a contract as detailed as possible in the presence of a lawyer. This will allow you to avoid later problems and to rent your commercial premises to your satisfaction.
