1. BOIDUS FOCUS MARCH 2016GUEST COLUMNIST / NEWS P2
by Boidus Admin
by Boidus Admin
WE are glad that Orapa
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President Building
Dr Ponatshego Kedikilwe to
chairESPCommittee
In response to Mmegi, the Permanent Secretary
to the MIST, Dikagiso Mokotedi, confirmed the
latest development.
“The client ministry [Office of the
President] has decided not to proceed
with the project due to its prohibitive
cost,” he said. “From MIST point of view
the project is out of our radar. The client
ministry is the one better placed to say
what they intend to do.”
President Dr Ian Khama has appointed a steering committee, chaired by Dr Ponatshego Kedikilwe
to oversee the esp Projects. The new committee will amongst others;
• Undertake periodic inspections of Government programmes and projects as shall be directed
by His Excellency the President;
• Advise the President on matters relating to the successful implementation of Government
programmes and projects;
• Undertake risk assessment and propose mitigation strategies for programmes and projects
that have been inspected; present written summaries of inspection reports to His Excellency
the President.
Orapa House, which used to house Botswana
Diamond Valuing Company, the entity that
transformed into Diamond Trading Company,
was supposed to be the new OP to improve the
availability of office space.
We have previously written an essay on why,
renovating the Orapa House for Office of the
President was a bad idea and we re-print it to
re-state our case for why this was and remains
a bad idea; see page 12.
The signing of a lease agreement by a landlord and a tenant signifies the conclusion of lengthy nego-
tiations for both parties to enter into an agreement in which the lessor (the landlord) provides property
rental to the lessee (the tenant).A lease agreement is simply a legally binding contract between the les-
sor and the lessee which states among others, the terms and conditions that will govern the agreement
during the duration of the lease period contract, management of the property, responsibilities of both
parties as well as the rental schedule outlining the agreed amount of money a lessee will pay the lessor
for the use of their property.
A lease agreement is essentially supposed to protect the interests of both the lessor and the lessee.
Agreements characteristically contain standardised clauses with terms and conditions that vary from
one property to the other and one property owner to the next. For example, a residential lease to rent a
house will vary slightly from an industrial lease to rent a warehouse. This article lists three of the clauses
that normally appear most types of lease agreements, which both the lessor and the lessee need to fully
comprehend before signing on the dotted line.
TERMINATION CLAUSE
The ‘termination clause’ is one of the most important clauses in a lease. In the currently difficult econom-
ic climate, property owners, especially those with commercial property, have been faced with challenges
in finding tenants who will occupy their property at the landlord’s preferred rental rate.This has forced
most landlords to drastically reduce their rental rates to increase their competitiveness in the faltering
real estate economy.To protect their business interests and safeguard rental flow of income, more and
more landlords have adopted the ‘no termination’ clause option.Therefore, tenants cannot opt to termi-
nate the contract and only the landlord can end the lease contract at their discretion.
Lessees need to carefully consider the ‘no termination’ clause. If possible a tenant should negotiate an
agreement which will favour both parties in the event that they (tenant) can no longer afford to pay their
rental amount.
A common option which works for both parties is for a tenant that wishes to terminate the agreement
to find a replacement tenant to take over from their rental of the property.This option ensures that the
landlords’ rental income is not disrupted, and a tenant can vacate a premise they can no longer afford to
pay for.
MAINTENANCE CLAUSE
Lessees need to be in the know on where the responsibilities of the landlord begin and where they end
with regards to maintenance of different works that need to be repaired/maintained within their rented
premise. Before a tenant moves into the building, a ‘walkover’ exercise with the landlord need to be car-
ried out.This allows both parties to note the different snags/maintenance issues that the landlord needs
to rectify before occupancy is assumed.This is particularly important if the premise had been previously
occupied by another tenant.
Maintenance issues arising from within the premise, such as an internal door malfunctioning, are typi-
cally the responsibility of the tenant to resolve.The landlord is normally responsible for the maintenance
of the ‘shell’ of the premise such as external windows and doors. It is also very important for the tenant
to note that they need to restore the premise to the condition in which they accepted it upon assuming
occupancy, unless a separate agreement has been made with the landlord.
INSURANCE CLAUSE
Landlords are encouraged to insure their properties to safeguard the replacing of assets should there be
damage to the property.Tenants also need to insure the contents of the premise they will be renting out
as the landlord is usually not responsible for the damages to contents incurred in a tenants’ unit in the
event of say,‘acts of God’ like flooding.
The insurance cover of landlords is usually limited to the external structures such as the windows and
common areas of the property, therefore, tenants need to ensure that their own assets are covered.
Many insurance companies offer cover for contents, both for personal and business reasons, which
tenants need to take advantage of.
An often forgotten but also highly important aspect of insurance is that of professional indemnity (PI) cov-
er. Property managers, although professionally and academically trained to provide good service to their
clients and keep the reputation of the business at an impressive level, are still human and the probability
of inadequate service being provided exist. Landlords, should therefore make sure that their property
managers are covered under a professional indemnity cover which normally ‘covers legal fees and any
other expenses which may be sustained in the defence of the company’ should the need arises.
In closing, lessors and lessees need to understand the legal implications of entering into a lease agree-
ment. It is always worth considering engaging a legal advisor before making the commitment to enter
into this type of contract. Most lessors have legal representatives which they employ to draft lease con-
tracts. Lessees should also make a point of engaging a professional legal representative to scrutinise the
contents of the lease document on their behalf should they have difficulties understanding the technical
and legal jargon used in legally binding documents.
3 LEASE CLAUSES TO
UNDERSTAND BEFORE
SIGNING ON THE
DOTTED LINE
By Neltah Mosimanegape