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What buyers should know about a commercial lease

On Behalf of | Jan 19, 2022 | Commercial Real Estate |

It can be extremely difficult to locate a commercial property that suits the operational needs of your business while staying within your budget. Once you find a location, you may feel a sense of urgency to move forward as soon as possible, but there are specific reasons why you may benefit from first taking specific things into consideration. Those entering a commercial lease would be wise to ensure the protection of their long-term interests. 

Failure to do your due diligence before signing a commercial lease may expose you to financial loss and other complications. It is in your interests to do your research and negotiate terms that will allow you to feel confident about your lease agreement going forward. There is a lot at stake, but your efforts may reduce the potential for costly disputes regarding the terms of the lease. 

Important questions you should ask 

As the tenant of a commercial property, you will have certain obligations to your landlord, such as paying your rent on time and caring for the property according to the terms of the lease. The landlord has certain obligations to you as well. In order to make this critical relationship work well, it is necessary for both parties to have a clear understanding of all rights and responsibilities. The following questions may be helpful: 

  • Who is responsible for maintenance of the property? Which party is responsible for upkeep of common areas? 
  • If the building needs major structural repairs, which party is responsible for hiring and paying for a contractor? 
  • Under what circumstances can a landlord choose to terminate the lease? What will happen if you break the lease early? 
  • Can you sublease the commercial building if you need to vacate the property for any reason? 
  • Is there an arbitration clause or terms that outline dispute resolution in case there is a problem? 

In negotiations, you may find that these questions help you seek terms that will provide the protection you need to move forward with confidence. While a California landlord may have a pre-written agreement, you have the right to ask questions, ask for specific provisions and take steps to ensure you are not taking undue risks. Before you sign on the dotted line, it will be helpful to understand your rights as a party in a commercial lease.