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Make sure to cover these topics in your lease negotiations

| Feb 13, 2020 | Commercial Real Estate |

This blog recently discussed some important aspects of negotiating a commercial lease. It may be useful to take a closer look at some of the key topics commercial tenants and commercial landlords should keep in mind when considering a commercial lease terms.

Knowing what to negotiate for and against in the commercial lease can help avoid problems down the road and protect the interests of the parties to the lease.

Rent Clause

Negotiating the rental amount may not be as straightforward as it seems and understanding the various aspects of paying commercial rent can help the parties protect their interests. Topics to consider include automatic rent increases; any tenant improvement deductions to the rental amount; a method for handling unanticipated rent issues and increases; and what operating costs the commercial landlord will pass along to the renter. Understanding these topics may help save the parties money and headaches down the road.

Description of the Premises

The description of the premises included in the lease should be as specific as possible. If the renter will be renting only a portion of the building, or the entire building, the lease should specify exactly what is being rented. The lease should also specify if the renter has limited access to other areas or otherwise.

Term and Parties

The business names of the parties should be included in the lease. Additionally, the term should specify when rent is due. Rent may be due when the commercial tenant moves in or may be due when the business is up and running. These are important details to spell out in the lease. This can also implicate insurance issues the parties should be familiar with.

Use and Exclusive Use Clauses

It is important to understand what uses of the property may be limited by the lease terms.

Improvements and Alterations

In commercial leases, it is critically important to include what alterations will be made, who will pay for them and how they will impact the rent.

Maintenance Clause

It is also important that the commercial lease include who will be responsible for maintenance, maintenance costs and what types of maintenance.

A variety of other clauses may need to be negotiated, ranging from renewals to parking, so commercial tenants and landlords should be prepared for those as well.

Commercial leases are not the same and residential leases and should be carefully negotiated. To do that, it is beneficial for commercial landlords and tenants to understand what should be included in a commercial lease and how to negotiate the terms of a commercial lease.

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