Understanding the Commercial Lease
Business people should know that certain rights that are available to residential tenants are not available to commercial tenants. Commercial tenants are presumed to be sophisticated and not requiring as much protection from the law. Also, Landlord’s typically have the leverage in the commercial lease deal, so it is even more important that the commercial tenant take steps to protect its interests.
One of the best starting points is to hire a competent real estate agent to help you find property that is right for you. Make sure you and the agent are clear on who will be paying the, typically the landlord (maybe through paying a commission to landlord’s own leasing agent, who would split commission with your agent).
After you find a location, you should have an inspection of the premises. If you are satisfied with the report, understanding the terms of the lease is the next step.
Again, unlike residential tenants, who have special protections under the law (regarding repair, deductions, withholding rent, etc.) generally, commercial tenants have only what their contract provides. Thus, typically, if it’s not in writing, it’s not part of the agreement.
Use the privative approach versus the remedial approach, as it is much more expensive to fix a problem than to avoid one. Leasing issues have caused the demise of many businesses. Don’t let it happen to you. Get it all in writing to avoid being stuck after a problem develops.
Note, there is no “standard” commercial lease. Obtain competent legal counsel to advise and represent your interests.
Typically, but not always, a commercial lease allocates the responsibility for repairing the roof, exterior walls, and utilities on the landlord; and the tenant is allocated responsibility for everything else. Note, the tenant is typically required to give written notice to the landlord of defective conditions. The Landlord then has 30 days to commence working on the problem, without a deadline for solving it.
The only way to protect yourself and your business from related consequences is to negotiate into the lease specific provisions that protect your interests.
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