Commercial Lease Review & Redlining
Review a 30-page draft commercial lease for a 5-year tenancy at Sandton City for your client Bean Republic Coffee (a fast-growing 6-store chain). Return a redlined version, a client memo, and negotiation talking points within 48 hours.
Your role
Attorney representing Tenant
Scenario
YOUR CLIENT Bean Republic Coffee (Pty) Ltd (Reg 2021/447812/07) — CEO Ms Refilwe Sithole. 6 existing stores (Rosebank, Melrose Arch, Hyde Park, Menlyn, Cavendish, Gateway). Latest audited turnover (FY2025): R38m. Target Sandton City store: 142m² on lower ground, adjacent to Woolworths Food. Projected turnover R9.6m pa; rent budget capped at R95,000/mo (base + ops). THE LANDLORD Liberty Two Degrees REIT, represented by Broll Property Group. Brolls attorneys (Cliffe Dekker Hofmeyr) sent a standard tenant lease on 23 May 2026 with a 48-hour turnaround demand. Rent commences 1 August 2026. COMMERCIAL TERMS ALREADY AGREED IN HEADS OF TERMS (dated 12 May 2026) - Term: 5 years (no options) - Base rent: R78,000/mo (R549.30/m²) escalating 8% pa - Operating cost recovery: at cost, capped R14,000/mo year 1 - Turnover rent: 6% of gross above R7.2m pa (annual reconciliation) - Beneficial occupation: 15 July 2026 (fit-out); rent commencement 1 August 2026 - Deposit: 3 months gross rent (bank guarantee acceptable) - Permitted use: sit-down speciality coffee & light meals CLAUSES OF CONCERN IN THE LANDLORDS DRAFT A cursory read reveals 12+ material problems, including: escalation increased to 12% (vs 8% agreed); operating cost cap removed; a 30-day landlord termination for convenience; tenant to bear ALL structural repairs; no sub-letting or assignment even to a group company; exclusive jurisdiction in landlords attorneys choice of forum; no exclusivity for competing coffee tenants; personal suretyship required from Ms Sithole up to R6m; CPA exclusion attempted; force majeure limited to landlords benefit. APPLICABLE LAW Consumer Protection Act 68 of 2008 (s14 fixed-term contracts if turnover < R2m — check applicability; s51 prohibited terms); Rental Housing Act does NOT apply (commercial); common law (huur gaat voor koop, spoliation, warranty against eviction); Conventional Penalties Act 15 of 1962 (penalty clauses); Alienation of Land Act 68 of 1981 (formalities for cession); Prescription Act 68 of 1969 (debt claims 3 yrs); POPIA 4 of 2013 for tenant data processing clauses. DELIVERABLES (i) Redlined lease with tracked changes; (ii) 1-page client memo in business language with red/amber/green risk rating; (iii) negotiation script for the call with Brolls attorneys scheduled Wednesday 10h00.
Learning outcomes
- Identify unfair clauses
- Apply the CPA & commercial norms
- Draft alternative wording
- Communicate risks in plain business language
Tasks you'll complete
Flag Problem Clauses
Top 6 problem clauses with one-line reason each.
Redlined Wording
Rewrite clauses 7, 12, 18 with tenant-friendly alternatives.
Client Memo
1-page business-language memo summarising risk, negotiation position, walk-away triggers.
Document pack
You'll receive 3 case documents when the simulation starts.