Hidden Problems in Commercial Leases
If you’re signing or negotiating a commercial lease, you probably look out for the typical, more obvious issues. How much you will pay, the term of the lease, and what is and what is not allowed on the property.
But many commercial leases have much less obvious “poison pills” or provisions in the lease that most people overlook, but which can come back later on and be a huge legal problem for you if you don’t spot these potential issues before you sign the lease.
Moving Your Business
Many commercial leases allow your landlord to move your leased property somewhere else on the larger property to a different rentable space or unit. Sometimes it is only where it is an emergency and the landlord has no choice, but other leases provide landlords the ability to do this kind of thing at their will for any reason.
This often overlooked provision can devastate your business and cost you a lot of money.
Worse, many times these provisions don’t give you any credit for any build out you may have spent on the property when you initially leased it and won’t give you any money to defray the moving expenses themselves.
No Assignment or Transfer
You may not have any desire to assign your unit or rented space to anybody. You don’t want to be a landlord and you intend on remaining in the rented space.
But what if your business changes ownership, or changes names? That could be considered an assignment or transfer of the lease. If you can’t transfer the lease, then when you rename your business, or merge with someone else, or just become a different company, that new company has no lease and can’t obtain the lease through an assignment — and can end up getting evicted.
Improvements to Property
You probably already know about maintenance and repair issues in a commercial lease and the kinds of legal problems these provisions can cause. But what about completely discretionary improvements, especially improvements to the common areas of the plaza, building or property that may not directly affect your unit?
Many leases will make tenants share in the cost of these improvements — improvements which can be decided on unilaterally by the landlord, at any time, for any reason, at any cost.
Parking Issues
In most cases, the landlord will incur the cost of construction, maintenance or repair in the parking lot. But even if that’s the case, what happens to your business if there is no parking for your customers?
If the lease allows the landlord to make repairs or to close parts of the parking lot at will, a rent abatement may need to be negotiated.
Speaking of parking, if you are near a business with a high volume of traffic (say, a gym, or a grocery store) you may want to negotiate dedicated parking so your customers don’t get frustrated when they can’t park near your business.
Don’t negotiate your lease or business contract on your own. Call our West Palm Beach commercial litigation attorneys at Pike & Lustig to help you with your business contracts.
Source:
alloydev.org/what-to-watch-for-key-tips-for-first-time-commercial-lease-reviews/
