It is very important to have a lawyer look at the commercial lease before you sign it. Here are some of the most common things that we look for in a lease. This is not an exhaustive list by any means. Remember call us before you sign.
You’ve done your due diligence with respect to the location and rents, but now you are stepping in the legal realm. Understanding your lease thoroughly is what you are going to read books about or turn to an experienced attorney to show you the ropes; we advise the latter. Negotiating certain points may be difficult depending on your position, but some points that are important to you may not even be on the Landlord’s radar.
Alterations – What kind of consent is required from landlord to alter the premises?
Assignment and Subletting – Can you assign or sublet? What conditions must be met in order to do so?
Casualty and Condemnation – Who is responsible for repairs and what termination rights exist?
Default Clauses – What triggers default? What cure periods are available? What remedies does each party have?
Holdover – If you overstay your welcome, what’s it going to cost you?
Insurance –Whose name is the insurance in? Who’s paying the premiums? What kind of insurance and thresholds are required?
Parking – What type of parking are you granted and how many spaces? Are there points in place to address a neighboring tenant that infringes on parking that is necessary for your business?
Permitted Use – What business activity is permitted? Can you change the use?
Real Estate Taxes, Operating Expenses, and CAM – Who is responsible for paying each? What are the terms of reimbursement? Can you audit the landlord’s statements of costs?
Relocation – Can the landlord move you to another location?
Renewal Options – How many? How long? How much notice is required?
Repair, Maintenance, and Surrender – Who is responsible for what during the lease and at termination/expiration?
ROFRs, ROFOs – Will you need additional space? Are you making significant improvements or want to be in the space for a long time? If so, you’ll want a right to lease or purchase space.
Termination Options – Can either party terminate? When? How much notice is required?