Three Things to Negotiate Before you Lease

Blog Negotiate 1 | Three Things to Negotiate Before you Lease
By Alan Gregory | 8th September 2014 | 4 min read


Three Things to Negotiate Before you Lease

Everyone is looking for a good deal and the best way to do so is to negotiate one.

Contrary to the movie stereotype, lessors are not trying to trick you into signing a bad contract. However, they do need to take their own interests into account when agreeing a deal with you. Negotiation, discussion and compromise are the pillars of business deals and you need to know what it is you want and that you are comfortable with the terms of your contract before signing – you don’t want to face a leasing horror story.

Here are a few things to consider putting into your contract to make sure your lease doesn’t contain any nasty surprises:

Cancellation Clauses

igning a lease signifies the start of a long term commitment. However, in business, the short term can change dramatically. What once seemed like a good business decision can turn into a long term problem, leaving you with equipment you don’t want or can’t use and paying for the privilege.

Before you sign anything, you need to be sure that you are willing to commit to the entire lease term – that the equipment is the right equipment, that it’s fit for purpose etc etc. If you have done your research, it is unlikely that investing in equipment will be a “make-or-break” risk, but it is still important to consider the worst case scenarios. None of us have crystal balls, but if you are conscious that your assets may have to returned sooner than thought if things don’t go to plan, we can still make a plan B to fall back on.

Make sure you are aware of your termination terms (if any) before you seal the deal. In general, leases cannot be easily terminated before the official end of the lease period by the lessee, but the converse can be said of the ease with which the lessor can terminate. Make sure you know what you’re getting into. You don’t want to be stuck paying for equipment you no longer want whilst your competitors are able to update their technology.

Maintenance and Breakages

Depending on your lease agreement, you will have different ownership responsibilities, which you need to be aware of before you sign. Even if maintenance is covered by the lessor, a simple maintenance check may be a condition within your agreement and if, for whatever reason, this is not carried out, you could be accused of breaching your contract.Things get broken. It is a fact of life and a particularly annoying one at that. We’ve all had experiences of shouting at printers, restarting desktops or creatively using a mixture of superglue and duct tape to keep things going, but sometimes we have to give in and call someone out to get something fixed. If an asset that you have leased gets damaged or broken, it is likely to not be the lessor’s responsibility to organise maintenance checks or replacements, despite them being the legal owners.

Terms of use

It is easy to assume that once you lease an asset, even though you technically are not the owner, you can use it however you want; that is not always the case. Most lessors will have restrictions on how you use your assets and you could find limitations on what you want to do. For example, you may want to use a piece of machinery at one site for a few months and then move it on to another site located elsewhere. However, your contract may only cover the use of the asset at one site, meaning moving it across depots could result in a breach of your contract and a hefty fine in the post.

Say you wanted to share the asset with a third party or even just paint the asset to match your company colours, you need to make sure you have approval within your lease agreement. It would be forgivable to overlook these petty issues, yet highly embarrassing and costly to realise you have breached your contract and are in a termination situation.

If you do not ask, you do not receive so it is often in your best interests to fight your corner. Remember to be realistic, a lessor is unlikely to agree to outrageous demands, but may be more accommodating than you think to simple, reasonable requests.

The thought of negotiating with leasing experts may seem daunting, but Innervision has its own leasing specialists with years of experience to help make sure that you are getting the best out of your leasing agreements, saving you money, time and hassle in the long run.

For more information about Innervision, be sure to subscribe to our blogs and check out our services section to see how we can help you harness the value of your lease portfolio.


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