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Issues to address in a commercial lease

On Behalf of | Mar 5, 2020 | Commercial Real Estate |

Orange County business owners looking to rent space will first need to enter into negotiations regarding the terms of that rental. No one should simply sign a commercial lease put in front of them without investigating the terms first in order to make sure their interests are protected. Below are just some of the issues to address when working out the terms of a lease.

The property owner may want a personal guaranty, which makes a company owner personally liable for any payments not made by the company under the lease. Many leases include clauses regarding an increase in rents. These clauses require close attention in order to double-check the landlord’s math and determine whether the terms are fair to and doable by the prospective tenant.

A commercial tenant may want to make sure there is an exclusivity clause in the lease as well. This prevents the property owner from renting to a competitor, which could undermine a tenant’s bottom line and ability to succeed. A related issue is how a tenant may use the property. Carefully watch this language to make sure it allows for expansion of the business and subleasing if this is an option in the lease.

The above represent only some of the issues that require attention before signing a commercial lease. It would be wise to never take any clause for granted. A document presented by the property owner will more than likely protect his or her interests, but not the tenant’s interests. From the letter of intent to negotiations to the final agreement, a potential Orange County tenant needs to remain vigilant in protecting his or her rights, and a good way to do that is to carefully scrutinize everything.