TRUSTWORTHY – COMPETENT- EXPERIENCED
If you run a business in a commercial space, you likely understand how important the right property is for the success of your company. A skilled commercial lease lawyer understands this, too. If you have a store, it must be in the right location to attract passersby and walk-ins. If you own a restaurant, the space must be set up in an inviting way for diners while accommodating the practical needs of a kitchen. If you simply run operations out of an office space, you want to make sure it one that makes your employees feel at home and increases productivity. Many business owners do not have the desire or resources to purchase a commercial space, so they search for property to lease.
At any given time, there are hundreds of commerical leases available in the Springfield area. However, even if you find the perfect space for your business, there is still another highly important factor to consider, the lease. This is where a skilled and experienced Houston commercial lease lawyer can help.
Whenever you are leasing space or equipment from another individual or business, you should sign a lease agreement that sets out the specific terms of the lease in writing. While a main purpose of a lease is to give the property owner certain rights and protections, the terms of the lease are also very important for your business. An unfair or incomplete lease can leave your business vulnerable and affect your overall success. For this reason, you should protect your company by having a commercial lease lawyer review a lease before you sign.
Commerical Lease Review
Most landlords draft their own commercial leases and, therefore, the leases tend to heavily favor the landlord’s interests in many cases. This means that some provisions may not be favorable to you—the tenant—and some may actually be unfair or unlawful. Commercial lease agreements are often voluminous with many provisions written in technical legal language. This makes it difficult for a business owner who is not familiar with commercial real estate law to completely understand all of the relevant provisions and identify any potentially unfair terms. Too many business owners sign commercial leases without realizing the adverse effects the lease terms may have down the road. A commercial lease lawyer can help you avoid any pitfalls.
There are many provisions in a commercial lease that may be harmful to a business tenant, including the following:
- Inaccurate property description – Many landlords base commercial rents on the square footage of a commercial space. However, if the landlord owns more than one unit or property, they may reuse the same commercial lease for different tenants. An inaccurate property description in your lease can result in inflated prices and other problematic concerns.
- Options for the landlord to terminate the lease early – When you glance over a commercial lease, you may not realize that it allows the landlord the right to terminate the lease early but not the tenant. Imagine that you fully set up shop, make adjustments to the space, purchase equipment, and settle in, only for the landlord to try to terminate the lease months later. Needless to say, this can be costly for any company owner.
- Passing variable costs on to the tenant – Your business already has plenty of operating expenses, so the last thing you need is to add on operating expenses of your commercial property. Some leases pass on numerous expenses to tenants, including utilities, property taxes, building repairs, and common area maintenance fees. These numbers can vary substantially from month-to-month and, all of a sudden, your rent could be significantly higher due to variable costs that a landlord passed onto you in the lease agreement.
- Limiting subleases – If you determine that you do not need the entire commercial space you leased or if you decide to downsize, you likely do not want to keep paying for the space you do not use. Subleasing to another company is often an attractive option in this situation. Additionally, if for some reason, you need to completely move out of the space before your lease expires, you can sublease the space to prevent penalties for early lease termination. However, if your lease limits your ability to sublease part or all of the property, you could be stuck paying a lot for space you do not need.
- Limitations on how the space is used – “Use” clauses are particularly important for many commercial tenants, and there are different types of clauses you should worry about. First, some landlords include clauses that state you cannot use the space in certain ways. Imagine that you have a bakery and sign a lease, not realizing that it states you cannot install an oven. Once you install the oven, the landlord may claim you are in breach of the agreement, and you cannot run your intended business. There are also exclusive use clauses that mandate only one tenant in the property can run a certain type of business. This term is positive if it is in your favor, as you can limit your competition. However, if another tenant has an exclusive use clause, it could severely limit your ability to conduct business in certain situations.
- Creating personal liability on the lease for the owner of the business– When you operate as a sole proprietor or a general partnership, owners will always be personally liable for business debts. This means that if your company does not have the funds to pay your commercial rent, the property owner can come after your personal accounts, home, and other assets. While LLCs and corporations provide protections from personal liability for business debts, some landlords try to include lease terms to have access to personal funds. Commercial leases may include terms that require a business owner to personally guarantee the lease, which means that they could try to seize personal assets regardless of the type of business entity you own.
In addition to making sure a lease includes no unfair terms, businesses also want to ensure that certain provisions exist that protect their rights in the landlord-tenant. Such terms may include limiting how the landlord can rent nearby spaces, which is an exclusive use clause in a tenant’s favor. For example, if you run a barber shop, you do not want your landlord renting to another barber shop two doors down that will compete with you and potentially limit your customers. It is just as important to protect the rights of the tenant in a commercial lease though some landlords will not voluntarily include these provisions.
over 30 years with a repuation of excellence
We have over 30 years experience helping various clients with their legal needs, with experienced and board-certified attorneys. We put our emphasis on helping our clients do what is in their best interest, and our clients’ needs always come first.
Schedule a free, no-obligation consultation with one of our experienced attorneys to review your case.
Our attorneys will help you decide what course of action is the correct decision for your particular situation.
We will be your partner and guide you through the law so you can have every advantage your entitled to.
Meet Our Attorneys
We Have a Team of Experienced, Trustworthy and Compassionate Attorneys
Jonathan R. Goldsmith
Thomas E. Argenio
Goldsmith, Katz & Argenio, P.C. is a well-established law firm in Springfield, Massachusetts dedicated to providing effective and efficient representation in a wide array of legal matters. We represent business and individual clients throughout Western Massachusetts, providing personal service and responsiveness that exceeds what is offered by larger firms.
Monday-Friday: 7:00 – 5:00
Saturday: By Appointment
Sunday: By Appointment