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Does your commercial lease protect you or just your landlord?

| Jun 24, 2021 | Uncategorized |

Leases are just contracts between someone who owns property and someone who wants to pay to use that property. While residential leases can be complex, commercial leases are even more so.

A lease could last for much longer when it applies to a commercial property. The landlord may pass on maintenance fees to the tenant or make them responsible for repairing the facility. They might even limit what a tenant can do in the property they rent.

Before you sign a lease, you usually want to review it to make sure that the terms protect you and your company — not just the landlord.

Are you on the hook if you can’t operate the business?

Landlords often expect to get paid even if a business can’t open due to unforeseeable circumstances. They may try to enforce a long-term lease even when a business closes permanently or the owner files for bankruptcy.

Including a force majeure clause in your lease could protect you. Such a clause allows you to terminate the lease or your obligation to pay rent in a situation outside of your control that prevents you from doing business, like extreme weather that damaged the facility or nearby roads or even an act of terrorism.

Is there flexibility for your business in the lease?

Does your landlord limit you only to very specific business operations? Do they have a lease with a very long rental term — possibly five years or more — when you worry that the company will grow and need to move?

You need to think about your plans for the business and what will likely occur in the next year, the next five years and the next decade. Negotiating for terms that give you the opportunity to get into a different form of business or sublet your commercial space to someone else if you need to move can benefit your growing business.

Thinking about your company’s needs will make it easier for you to negotiate favorable terms before you sign a commercial lease. Getting experienced legal guidance is also wise.