Commercial lease considerations: avoiding disputes down the road

On Behalf of | Sep 16, 2015 | Contract Disputes |

There is a vast chasm separating the considerations that underlie execution of a residential versus commercial lease, respectively.

Negotiations regarding the former lease product — if any — are typically conducted in rather perfunctory fashion and in a take-it-or-leave-it vein. Although variations do occur in lease terms in select cases, of course, it is certainly more often the case that a residential lease remains close to a boilerplate document, regardless of the tenant.

That is far from the case with a commercial lease, which differs materially in myriad respects and demands closest attention from business principals prior to its execution.

And whether a business entity involved in lease negotiations is a corporation, family-owned business, limited-liability company or partnership, material concerns will attach that have important legal implications.

As noted in an online overview of commercial leases, such documents “are more complicated than residential leases” and come with fewer built-in legal protections.

Indeed, business principals are typically assumed to be far more astute and sophisticated actors than apartment seekers, and are thus far freer to reach varied outcomes in their agreements.

That is liberating, of course, but also demands exacting vigilance and extreme care in negotiating and signing complex documents that establish rights and liabilities.

Many critically important matters come immediately to mind regarding commercial leases, and any experienced business principal will ensure that they are fully considered in all their legal dimensions.

How long will the lease term be, for example? What is the rental amount, and what is it based precisely upon? Can a cap on subsequent rent increases be negotiated? Can business-related modifications be made to the property without a penalty being enforced? Can the property be subleased to another tenant if that becomes necessary? Does the contract say anything about a lessee having exclusivity rights that protect against a business rival getting a lease next door?

Many additional and complex concerns often emerge during negotiations focused upon a commercial lease. A business entity involved in the process should reasonably want to secure the timely assistance of a proven commercial law attorney to help ensure that all material considerations are addressed and that risk has been safeguarded against to the fullest extent legally possible.

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