Owning a business can be complex and stressful. One of the most stressful components is also one of the first stressors an entrepreneur will encounter, and that is finding and finalizing commercial space. It is important that a business owner understands the lease and the terms, so hiring an experienced real estate attorney is crucial for this process.
Commercial leases are very different from residential leases, but often times are much more negotiable. An attorney can not only help you understand the details of the lease, they can assist you with negotiating the terms of the lease to ensure you have a space that is tailored to your company’s specific needs. Unlike residential leases, commercial leases are not standard forms, and there is far less protection than what a residential lease would provide. A commercial lease is typically for a longer period of time than a residential lease offers. Having a complete understanding of the lease is critical because just a like residential lease, commercial leases are contracts and are legally binding.
There are also some similarities between commercial and residential leases. First, the amount of the lease must be within what the lessor can afford, and the term of the lease should also fit the business’s needs short and long term. Other key terms that should be included in a commercial lease are:
- Names of the landlord and the tenant
- Define the premises, including if signage is allowed on entrances
- Terms of the lease
- Obligations of the landlord
- Obligations of the tenant
- Base rent
- Security deposit
- Common areas and who is responsible for maintenance
- Real estate taxes and who is responsible for them
- Use of space
- Compliance with laws
- Dispute resolution
- Options for subleasing the space
- Alterations permitted
- Entry by landlord
- Terminate of lease
- Right of first refusal for additional space that may come available
- Damage and destruction
- Defaults and remedies
Although commercial lease agreements are complex and lengthy, they are helpful to address any issues that could arise in the term of the lease before it actually happens. They are drafted to include all information so disputes between the landlord and the tenant are limited. In most states there are laws that control what a commercial lease can and cannot contain, as well as the obligations of the landlord. By retaining a real estate attorney to review your commercial lease, you will know that you understand each detail of your lease and will avoid future frustrations.