Southern California commercial real estate has been experiencing a significant boom over the last several years, but some are warning that the trend may be slowing down as the overall pace of the U.S. economy continues to slow. The UCLA Anderson Forecast recently released its biennial survey of real estate leaders, indicating the upward trend in California real estate is losing momentum.
Commercial tenants often sign a lease and forget about the agreement until the last couple of months before its expiration. Yet there are important facets of business leases that every commercial property tenant needs to review to ensure that they do not incur excessive charges from their landlords.
While many landlords and tenants would never dream of becoming party to a lease without a well-crafted written lease agreement, the question is often posed whether or not a lease can be entered into though only a verbal agreement. It may difficult to conceive of many situations where a landlord and tenant would both find it in their long-term best interests to enter into a lease without solidifying the terms in writing, verbal agreements can be considered legally binding in California, provided they meet certain conditions.
It is not uncommon for a landlord to attempt to change provisions of a lease while still within the terms of that lease. In almost all cases, this is a breach of the lease, and should not be tolerated by a tenant. Often, a landlord who attempts to make such changes is a novice trying to deal with a specific tenant problem in a poor way. Understanding some of the basic reasons a landlord may attempt to modify a lease agreement while the term is still active may help you know how to approach the situation if and when you find yourself or your business facing it.
Sometimes in the course of business, it becomes necessary for a business to consider subletting a space that it has leased. There are many ways that this can be a viable solution to many leased-space issues, but it is important to always consult the master lease to make sure that there are no provisions that may be problematic for those looking to sublet. Understanding potential provisions such as a "recapture right" may save headaches when considering whether to sublet a commercial space.