5 things to keep in mind about the factory lease agreement
Ready-built factory is a very popular form of business expansion today. Leasing ready-built factories help enterprises to be proactive in their capital and monthly expenses. After choosing appropriate factories, the lessor will proceed to sign the lease agreement. So what are the things that enterprises need to pay attention to in a factory lease agreement?
Before signing a factory lease agreement, what do enterprises need to pay attention to?
#1 Delivered equipment and tools
A factory lease agreement often states equipment and tools to be delivered. These may include electrical and water equipment, equipment for production, etc. The enterprises need to ensure the delivered equipment is intact. The equipment must be delivered in full as in the ready-built factory lease agreement. This need to be checked carefully before completing handover procedures. Problems arising and damage of equipment and tools are sole responsibility of enterprises.
#2 Deposits and forms of deposit refund
The agreement also states the deposit to be paid in advance by enterprises as well as the form of deposit refund. The deposits of ready-built factories prescribed by factory lessor aim to ensure the contracting. It is necessary to specify that the deposit is not used to pay for the rent. If the company complies with the agreement, the deposits will be refunded when the factory lease agreement expires. Deposits can be large or small depending on different lessors.
#3 Factory lease term
Before payment of deposits, each company will know in advance the lease term of factory warehouse. Therefore, please check carefully whether the term mutually discussed by the two parties is mentioned in the lease agreement or not. If the factory lease agreement does not expire but the enterprises intend to stop production, the previously paid deposits will belong entirely to the service provider. After the lease agreement expires, enterprises can extend the lease agreement if they intend to continue the lease to serve business and production.
#4 Rate of annual price increase
Because many problems occur each year with different exchange rates which often tend to increase. In the lease agreement, the lessors will add the "rate of annual price increase" section. This means that every year there will be changes in price of factory for rent in accordance with the market economy, avoiding the devaluation of the currency affecting both parties. Therefore, the rate of annual price increase is expected in the lease agreement for reference.
A normal factory lease agreement will be valid from the date of signing. It means that both parties must comply properly and adequately with what is stated in the agreement. Therefore, enterprises need to pay attention to the terms of the agreement. Special attention should be paid to the above 5 sections to avoid errors that cause damage to the enterprises during leasing a factory.