For any type of business, a contract is necessary. Especially for manufacturing enterprises, the need to rent factory space and storage warehouses is frequent, plays a relatively special role for businesses..

1. The definition and necessity of factory leasing contract

A factory leasing contract is an important legal agreement between the factory owner and the lessee. This contract specifies the terms and conditions for renting and using the production space. It is not only a document but also a crucial foundation for the long-term relationship between the two parties.

Rental factory requires a commitment of contracts between both parties

It is not only a normal document that ensures transparency and legality for both parties, but is also a premise for creating a stable and trustworthy business when working together.

For the leasing contract to be valid and effective, both the lessee and the lessor need to clearly agree on the rental prices, terms, conditions of use, and other factors. This helps all parties have a clear understanding of their responsibilities and minimizes legal risks.

2. Types of leasing contracts

Depending on the business goals and specific conditions of each enterprise, choosing the appropriate type of leasing contract will help optimize the efficiency of using production space and minimize risks during business operations.

Currently, there are three common types of leasing contracts: long-term, short-term, and flexible lease contracts. Each type has different advantages and disadvantages and is used by businesses according to their varying needs and circumstances.

Enterprises choose the appropriate factory leasing contract based on their needs

• Long-term leasing contract: The contract usually lasts three years or more, used for long-term business purposes. Long-term leases usually have more stable rental prices compared to short-term leases, as they reduce fluctuations in rental prices and transaction costs for both parties since each negotiation and transaction can be time-consuming and labor-intensive. It also helps businesses make better financial plans based on stability from rent.
• Short-term leasing contract: This contract usually lasts from 6 months to 1 year. Enterprises or organizations with non-fixed expenses, changing rental conditions, and frequent relocations of their business or production locations will be more available for this option. With a short-term lease, the lessee can flexibly change to another location when the contract expires without being too constrained like with a long-term contract.
• Flexible leasing contract: This contract allows for flexibility during the leasing period, such as changing conditions, terms, or rental rates. It helps both the lessor and lessee to customize the contract according to their actual needs.

3. Standard structure and content of the contract

3.1 Objectives and scope of the contract

Objectives of the factory leasing Contract:

• The primary objective of the lessee is to have a location and available space for their business needs.
• The objective of the lessor is generally to generate profit from renting out their real estate. Additionally, the lessor aims to ensure that the property is used appropriately and maintained in the best possible condition.Besides that, the lessor wants to ensure that the asset is used reasonably and maintained in the best possible condition.

Objectives and scope of the contract ensure transparency in the leasing process.

The scope of the leasing contract for renting factory space is similar to other types but with a few differences related to real estate leasing:

• The scope of the lease contract defines the terms and conditions that both parties agree to comply with before and during the leasing period.
• The contract agreed upon by both the lessee and the lessor may include rental prices, lease duration, payment terms, responsibilities of the lessee and lessor, and other terms such as property use, repairs and maintenance, and termination conditions.

Depending on the needs of each enterprise, the terms of the contract can vary, but the terms and conditions must be fully and absolutely agreed upon by both the lessor and the lessee. This prevents unnecessary disputes during the lease period, which could affect the reputation, effort, and costs of both parties.

3.2 Renewal terms and conditions

In a real estate contract, the “term” refers to the specific period during which the contract is effective. This is the time during which the lessee has the right to use the property, and the lessor has the obligation to provide the property to the lessee. The term is clearly and transparently defined in the contract, such as 1 year, 2 years, or longer or shorter, depending on the needs of the leasing enterprise.

Renewal conditions are usually agreed upon by the lessor and the lessee to continue the lease contract after the initial term ends. These conditions may include:

• Agreement on the new rental rates for the renewal term.
• Determination of the renewal period and the method of notification to the lessee.
• Conditions regarding the maintenance of the property during the leasing period and the subsequent term

3.3 Costs and Payment Methods

Costs and payment methods can be changed based on the agreement between the lessor and the lessee. However, some common costs and payment methods in the real estate leasing process include rental costs, deposit, service and utility fees, maintenance and repair fees, and contract registration costs.

Payment methods can be agreed upon by the lessor and the lessee, with payments made in various ways. Payment can be made once or divided into many different times depending on the agreement between the two parties. Various payment methods include cash payments, bank transfers, or different electronic payment methods.

4. The importance of choosing a reputable rental factory

4.1 Guaranteed benefits when renting a factory

A reputable leasing company will not abruptly increase rental rates depending on market fluctuations and will offer flexible and clear payment policies for customers. They will provide services as specified in the contract signed with the customer. A reputable company helps minimize the risks associated with renting real estate and ensures the customer’s benefits during the leasing period.

Choosing a reputable leasing company helps ensure benefits and reduce risks for businesses

4.2 Avoiding legal risks

A reputable company often provides detailed contracts with clear conditions, ensuring compliance with legal regulations related to leasing, such as taxes, fees, and regulations on environmental protection. Businesses will receive thorough legal advice before, during, and after the leasing process, allowing them to focus on their business and production without worrying about legal paperwork when renting real estate.

>>> See more: Why location is key when renting a factory in Vietnam: Factors to consider

5. Gaw NP Industrial – A reputable factory leasing company in northern Vietnam

As one of the pioneering leaders in the field of reputable factory leasing in Northern Vietnam, Gaw NP Industrial is proud to be a trusted partner for many clients. With advantageous geographical locations and modern designs that meet technical standards to meet the needs of businesses for renting factories in today’s market.

Gaw NP Dong Van with modern design, meeting all business needs

With the criteria of bringing satisfaction to customers, modern and sustainable design style, and optimizing costs and time for businesses during development and expansion process.

Currently, Gaw NP Industrial operates large-scale projects such as GNP Yen Binh 1, GNP Yen Binh 2, GNP Nam Dinh Vu, GNP Dong Van 3. All projects are equipped with amenities that meet the needs of businesses, especially in industries like component manufacturing, technology, and mechanical engineering, offering significant growth opportunities when setting up factories here.

Conclusion

Establishing a leasing contract for warehouses and factories requires businesses to thoroughly research their leasing partners and various conditions. Businesses need to choose a partner that provides reputable factory rental services, trusted by many people to ensure the lowest risks during the operation process. This helps avoid wasted time and costs that could impact the business operations of the company.

>>> See more: Uncover 8 key benefits of renting factories in Vietnam for business success

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