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Look for these terms in your commercial lease

On Behalf of | Jul 23, 2020 | Commercial Real Estate |

Smart business owners know how important it is to be prepared. Despite this, many sign commercial lease agreements without checking for certain terms and information, or negotiating when necessary. Noncompete clauses, dispute resolutions and spatial specifications are just three areas California business owners should look for in their commercial leases.

A competitor setting up shop nearby can spell disaster for a small business. While it might not be possible to completely prevent competitors from opening nearby, it is possible to negotiate a noncompete clause in a commercial lease. The landlord cannot lease a space to a competitor of the tenant in the same shopping center or even nearby.

Dispute resolutions should also be addressed in a commercial lease. In general, arbitration or mediation are effective methods for resolving disputes. A commercial lease that details these as acceptable dispute resolutions can be advantageous, although some business owners might feel understandably worried about forfeiting any right to file a lawsuit.

A business owner should also be sure to avoid paying for a bigger space than he or she is actually leasing. It is not uncommon for landlords to exaggerate measurements. Physically measuring the space with a tape measure will show the space’s actual dimensions. Should someone find a discrepancy, he or she could use it as a bargaining tool for negotiating other terms of the lease.

It is impossible to anticipate every possible need or problem that may arise in the future, but it is certainly possible to prepare as thoroughly as possible. Understanding which terms to look out for within a commercial lease is just one such way of preparing. But the wording used in contracts is not always entirely clear, and renters may want some guidance for this process. This is why California business owners sometimes turn to experienced attorneys before signing commercial leases.