If you’re a tenant signing a commercial rental agreement (lease), it’s important to negotiate the terms of that lease to ensure that it will meet the needs of your business. Of course, the landlords also have items that are important to them, and they want those covered in the agreement. If you’re fortunate, you can agree on terms that are suitable to both you and them.
Commercial leases cover items such as rent and additional costs, such as utilities, maintenance and taxes. They also cover the timeframe of the initial lease and options for renewal. They address the duties of the parties to each other and the potential consequences if either party is negligent in those duties.
The essential provisions to include will depend in part on what type of business you have. However, following are a few, in addition to those noted above, that most every tenant should have.
Non-compete clause: This prohibits landlords from renting space to a competitor on the same commercial property. For example, if you’re opening a yoga studio, you don’t want a competing studio opening within walking distance of you.
Default or termination: The lease needs to specify under what conditions either the tenant or landlord can get out of the lease as well as how much notice one party needs to give the other.
Dispute resolution: Generally, it’s best to specify that any dispute between you and the landlord will resolve via arbitration or mediation rather than by going to court.
Buildouts: The lease should spell out the precise amount of space that is covered. It’s best to measure it yourself to ensure that the spatial specifications in the lease are accurate. However, the lease should also address what buildouts (modifications and improvements) you can make to the space and who will pay for them.
Even if you believe you’ve gotten all the terms you sought, it’s essential to read the lease carefully before signing it. It’s also wise to have an experienced Florida commercial real estate attorney review it to help ensure that you’re not inadvertently agreeing to something that could end up costing you down the road.