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Which provisions of my commercial lease may require negotiation?

On Behalf of | Jun 28, 2022 | Real Estate Law, Real Estate Law |

Before signing a commercial real estate lease, tenants and property owners have a right to negotiate its provisions. As a business owner, you could face risks of unexpected revenue loss. Your lease may need to offer you some flexibility.

As reported by Inc.com, a rental agreement may include a termination clause. Because you could suddenly need to shut down your business operations, your lease may outline an amicable exit strategy.

How may a commercial tenant end a lease?

With a short-term rental agreement, a property owner may find a replacement tenant quickly and might not file a legal action if you leave early. When your lease has a few months left before expiration, however, it may require paying rent for a vacant unit.

Long-term leases, however, may include terms describing how tenants could sublease or assign their contract to another business. Some property owners prefer to screen a potential sublet and approve a subtenant. Terms may include the process for obtaining permission to transfer or assign your agreement.

When may I negotiate my rent or make improvements?

Because commercial real estate generally follows the economy, rental rates may reflect anticipated market conditions over the next 12 to 18 months. To remain competitive, some landlords may agree to a reduced monthly rate in exchange for signing a long-term agreement.

A commercial lease may include terms for tenant improvements. Some property owners could offer an allowance to cover the expenses if you install new fixtures or flooring. If you leave abruptly, however, a property owner may begin a legal action to recover unforeseen expenses such as removing any fixtures left behind.

If an unexpected event causes your business to close, a landlord may file a legal action for relief if you vacate early. You may, however, negotiate terms that outline what occurs if either party breaches the contract.