A commercial lease is a very important contract that establishes a foundation for a successful business. But if not properly prepared and negotiated, it can become the source of a legal dispute or serve as a financial albatross that can unnecessarily costs a commercial tenant or landlord large sums of money. So before entering into a commercial lease, keep the following things in mind to reduce your chances of having to hire a commercial lease lawyer who specializes in contract litigation.
Limit the Potential Damages
No one enters a commercial lease expecting to breach it. But when they do, they could be on the hook for some hefty damages. Some of these damages will be inevitable, but each side needs to run the numbers and make sure the other side doesn’t enjoy a windfall.
For example, if a commercial tenant can no longer afford to pay rent and moves out, the commercial lease will probably require the former tenant to either pay all of the remaining rent up front or continue paying the rent each month.
But what if the landlord is able to find a new commercial tenant within a few months? The former commercial tenant shouldn’t have to continue paying the landlord full rent each month. A commercial tenant should consult with his or her contract attorney and identify parts of the commercial lease where this scenario could happen and make the appropriate changes.
Don’t Forget About the Stuff Outside the Premises
Commercial tenants need to take particular care to think about considerations other than the property space itself. For instance, how many parking spaces will be required? Does the tenant need access to additional storage next to the premises? Commercial tenants need to make sure they don’t forget to make arrangements with the landlord in order to meet these needs.
Understand the Renovation Obligations
Before a commercial tenant moves in, there might be certain changes that need to be made to bring the property up to code. Depending on the extent of the renovations required and the short amount of time the commercial tenant will stay at the property, it may be unrealistic for the landlord to expect the commercial tenant to bear the burden of paying for these type of renovations.
On the flipside, the landlord shouldn’t agree to spend a large amount of money to renovate the property to the tenant’s wishes if the commercial tenant will only be there for a short period of time. Basically, each side needs to be realistic about their obligations to the other side.
Clarify and Establish Termination Rights
The parties need to know what happens if the lease must be terminated. If a natural disaster strikes and damages the premises beyond reasonable repair, is the tenant still obligated to stay? If so, the landlord will likely have a duty to make necessary repairs in a timely fashion. But if the landlord can’t do so, is there a provision in the lease that will allow the commercial tenant to vacate the premises without being in breach of contract? All of these questions must be answered before signing on the dotted line.
For More Information
About to sign a commercial lease, but aren’t quite sure if you’ve done everything you get the best terms and protect your rights? Or maybe you haven’t even started searching for a commercial property because you don’t know where to begin. Either way, you can contact the Thomas Law Office and speak with a commercial attorney who can advise you before entering into a commercial lease.
