5 Key Commercial Lease Agreement Areas for Negotiation

A commercial lease agreement is a key part of your business. Although, a real estate lease agreement is prepared to favor the landlord. You can always negotiate for modification of some clauses to benefit you too.

  1. Assess the Length of the Leases

    What type of business is your investment and is it location-dependent? A short-term lease of 2-3 years is best for small businesses. Firms in the hotel industry which needs location security prefer taking a short-term lease with renewable option or a long-term lease of 5-10 years. A short-term lease is applicable where rents tend to go down or when you want to shift to another location.

  2. Negotiate a Fair Price

    A commercial lease agreement requires one to negotiate fair terms with the landlord. Negotiate for rent, in case of rent increase, amount of security deposit and conditions for its return.  

  3. Check for Hidden Cost Charges

    Examine if the lease is a ‘gross lease’ or ‘net lease.’ A landlord may require a tenant to take up the cost of maintenance or upkeep. Get to know the current condition of the utilities and estimated cost and later negotiate for a better deal.

  4. Ask for Favorable Clauses

    Ask for changes in the lease that will benefit you and your business. You can ask for a clause to allow you to sublease, a co-tenancy clause or a clause that restricts the landlord from renting out similar businesses.

  5. Examine the Termination Clause Closely 

    Read and understand the conditions that will lead to default and termination of the lease. Negotiate for any penalties for early termination and time to cure a default.

    Remember to read and understand the terms in your commercial lease agreement. In case you need help or an attorney representative, check out real estate and land law attorneys in Coachella Valley.

SBEMP’s Real Estate and Land Use Attorneys

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Marc E. Empey

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Thomas S. Slovak

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Wendy S. Dowse

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Robert L. Patterson

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Brent Clemmer

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David L. Baron

DISCLAIMER: This blog post does not constitute legal advice, and no attorney-client relationship is formed by reading it. This blog post may be considered ATTORNEY ADVERTISING in some states. Prior results do not guarantee a similar outcome. Additional facts or future developments may affect subjects contained within this blog post. Before acting or relying upon any information within this newsletter, seek the advice of an attorney.