What is a Commercial Lease?

A commercial lease is a contract between a business and a landlord for the rental of property. Many businesses choose to rent their storefront space instead of buying it because it requires less capital. Entering into a commercial lease is a huge decision that can make or break your business. 

If you are considering entering into a lease for a commercial space, there are certain things that you need to know about how commercial leases are different from residential leases, and you should understand and agree with the basic terms of the lease agreement.

What are the Basics of a Commercial Lease?


There are certain basic elements that every lease needs to have in the agreement. These elements include:

  • Rent: How much and when the rent is due, and whether there will be increases. If there will be rent increases, you may want to negotiate with the landlord for a cap on the percentage of rent increase; 

  • Duration: When the lease begins, how long it lasts, when it ends, and how to renew. If you are just starting a business, you may not want to tie yourself to a five or ten year lease if you can help it. If your business grows faster than you expected, or the location does not work out for you, you will want to have a little flexibility in the duration of your lease; and

  • Security Deposit: The amount of the security deposit, how and when it is returned, and whether a letter of credit can be used rather than cash.

The lease should also provide for certain practical considerations, including which party is responsible for utilities, insurance, and property taxes. Sometimes, these costs are factored into the rent payment.

Important Items to Consider For Commercial Landlords

 

Writing up your initial lease agreement as a commercial landlord can be just as critical as choosing the right tenant. Having a well-drawn and clear-cut lease that protects your rights as Landlord and building, is extremely important. A commercial lease attorney can take you through the process and gather the necessary information to draft up a top-notch lease agreement that protects you thoroughly and fits your specific needs.

More often than not, the businesses that rent out your space are there on a long-term basis, so you want a fair lease agreement that will foster a mutually advantageous business relationship, but also one that fully protects you as Landlord. There will most likely be various negotiations that must be had and areas of contention that arise and you will need counsel that is experienced and well-versed in these matters, as the FAAN Law Firm is. And if any lease dispute or conflict ensues, we are experienced landlord and tenant, and real estate litigation attorneys who have the expertise to handle your situation.

Leasing Space as a Business Owner

As a business owner, every decision you make can have a great impact on the future of your business. You do not want to make this choices haphazardly, as these commercial leases are often long-term arrangements, and expert counsel is key. So be sure the lease attorney you hire will thoroughly analyze every aspect of the lease before signing anything.

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