Signing a commercial lease is exciting, but it is also a very serious commitment. Don’t be fooled into believing that you are signing a “standard business lease.” Every seasoned business owner knows that each clause in a commercial lease can be negotiated and should be negotiated in your best interest. Business owners should work with an attorney and take advice from experienced business owners who have rented before. Remember there are possible legal loopholes for residential tenants, but commercial tenants you are on your own to negotiate a lease that protects your own interest, which can ultimately determine the survival of your business.
Long-Term Lease
Landlords prefer to lock tenants in long-term leases. While a long-term lease may result in a lower rent, there may be disadvantages to be committed to one location for a long period of time. You should ask to keep the initial commitment shorter and negotiate renewal options. If your initial term is longer, you should ask for an option to sublease or option to assign. Your assignment rights should allow you to transfer the lease, subject to landlord’s reasonable approval. It’s reasonable for the landlord to require express written permission for you to exercise your option to assign or sublease, but make sure you include that the landlord will not unreasonably withhold the clause after the requirement for landlord’s permission.
Additionally, the lease should also address other early termination factors such as bankruptcy or default. This is where your attorney will come in handy to come up with agreement clauses that are fair for you and also will satisfy your landlord. Your attorney can also assist to put a cap on the amount of damages you are responsible for if you terminate your lease early.
Zoning Approval in Your Lease
An attorney who handles commercial leases also knows that you must get permission from the city or township zoning officer. You cannot rely on the landlord’s word that your business is approved for zoning. Zoning rules are complex and vary according to location. Zoning issues should be addressed early in the negotiation process. Keep in mind that governmental approvals take time and may delay your ability to occupy the premises for your intended use. The lease start date should be contingent upon all zoning and other governmental approvals required to occupy the premises for your intended business.
In short, put your excitement for the future aside, do your research, be calm, and get the best support in negotiating your lease. Commercial lease negotiations can be manageable. And remember, your business is not doomed if you don’t get that particular space. Instead, negotiate a lease deal that supports your business’ good health.
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Disclaimer: The above is provided for informational purposes only and is not intended to serve as legal advice. Seek legal advice only from an attorney. To contact us click here.
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