Signing a new commercial lease is an exciting part of business growth and change, but it is one that should be approached with caution. Commercial leases are legally binding documents, so be certain that you know the terms of your lease before signing. These are often longer-term leases than residential rental agreements, so location should be considered carefully before signing. Some other key elements of your lease to pay attention to include:
Length of lease
Inclusion of utilities
Available phone, television, and internet providers
Coverage for any necessary repairs during the lease
Areas of the property you are allowed to access and utilize
Lease termination policies
Landlord’s right to enter the property
These common elements of a commercial lease can have a tremendous impact on your business’s success, particularly those which impact your expenses and cut into your profit margin.
Protecting Your Business
As a business owner, you must be careful to make decisions which benefit your business. Prior to signing a lease, you should familiarize yourself with the laws related to business leases, which are different from those governing residential contracts. These differences can be to your benefit if you are aware of them and include considerations in your lease contract negotiations.
Due to the fact that California law requires only three days of notice prior to eviction for commercial tenants, you may wish to negotiate specific payment and eviction terms. According to the law, the eviction can still proceed even if you make a partial payment of the amount owed. Additionally, you are required to pay rent even if other conditions of your lease are not met by the landlord. However, your lease can help you to prevent any eviction issues if it is clearly worded.
One unique aspect of commercial leases is that you can negotiate to include wording that protects your business from competition. This protection will take the form of an exclusive use or non-compete clause. These clauses prevent the landlord from leasing another space in the same building or area to a similar business. However, clear and specific wording is required in order to ensure that you really will escape competition. Your landlord can also employ a use clause to dictate what kinds of business you cannot conduct in the space, so this is an area of the contract to check carefully.
Another important way in which you can protect your business is by being aware of and negotiating future rent raises into your contract. While you will not be able to completely prevent rent hikes, your contract can put limits on those hikes in place. This is an essential part of your lease negotiations, as California law prohibits commercial rent control.
Benefits of Contacting an Attorney
Consulting the attorneys at Verhagen Bennet LLP can help you to avoid unwittingly signing a lease that does not meet your standards or needs. This could help to prevent you from being locked into a long-term lease in a space which does not work for you. Contact us today to schedule a consultation.
© 2019 Verhagen Bennett LLP — This article is for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.