Q. I want to open a new restaurant in Galway and I have seen a building for rent which would be suitable. I have contacted the estate agent who has confirmed that the lease will be for 21 years with a rent of €3,600 per month. What are the main areas that I need to be made aware of before signing a lease?

A. This type of lease is normally referred to as a full repairing and insuring lease (FRI). Under the lease you will be known as the tenant and the person renting it to you will be known as the landlord. The lease will contain the agreement between you and the landlord for the letting of the building. Before signing it certain matters will have to be agreed between you and the landlord and I have set out the most important areas from the tenant's point of view.

Where you intend to rent the whole building you will be responsible for the maintenance and repairs to the interior and exterior of the building. Where the building being rented is a number of years old it would be advisable to have a full survey carried out by a surveyor and to have a schedule of condition of the building attached to the lease. A clause could then be put into the lease which would ensure that you only have to repair the building to the state it was in at the time the survey was carried out.

The rent which you will have to pay will vary over the term of the lease and it would be usual in a lease for 21 years to have a rent review after five years. The rent would be reviewed upwards only so it would not be possible to look for a reduction in the rent. In these economic times it might be possible to negotiate the rent with the landlord which would benefit you when the rent is reviewed in five years time.

The insurance for the building will normally be the responsibility of the landlord and you will have to pay the premium for this. As a tenant you should try to have your interest in the building noted on the insurance policy as the insurance company when paying out on a claim will make the cheque payable jointly between the landlord and the tenant. This will give you control as to how these monies are spent in repairing or replacing the building. As a tenant you will be required to take out separate insurance policies for public liability and contents insurance.

Because you are going to use the building as a restaurant you will have to make sure that the building has planning permission for use as a restaurant and if it does not you will have to make a planning application to get this permission. A planning application will have to be paid for and will take a minimum of three months before it is completed. It would not be advisable to sign the lease until this permission was granted.

VAT may be chargeable on the lease and you should seek the advice of your accountant as new regulations came into force on the 1 July 2008.

Where the lease is for a long term it would be usual to have a clause in the lease which allows you to bring the lease to an end after maybe 10 or 15 years. This type of clause is known as a break clause.

As can be seen from the above there are a number of important matters to be considered before signing a lease of this type. You will now need to consult your solicitor at this stage so that you can be fully advised of all the relevant matters involved in renting the building.

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