Reviewing Your Commercial Lease

Everyone knows what they say about real estate: location, location, location. This same axiom is definitely true for many businesses too. While some businesses may operate out of homes and employ their workforce remotely, many operations require a physical location to which workers and customers go on a daily basis. For example, stores, restaurants, and other locally-serving businesses always want to have a prime location with lots of foot traffic and easy access in town. Others, such as manufacturers, need large warehouses with affordable rent and room for all their equipment. While many business owners choose to own their building, many others do not have means to do so, or may not want to commit to one location long-term. For these reasons and more, many business owners lease their commercial spaces.

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For any type of lease agreement or contract, you want to be sure that all of the provisions are fair and reasonable. A proper lease will set out your rights as a tenant, and you want to be sure it does so adequately. A commercial lease will also designate your responsibilities as a business tenant, and you should be aware of any terms that require unreasonable or difficult responsibilities from you. Because each of these lease types can be complex documents with confusing legal language, you should always have any potential leases reviewed by a highly experienced business attorney prior to signing.

Of course, you will want to make sure the length of the lease and rent requirements suit your needs. The following are some additional terms your attorney will consider and review:

  • Whether any variable costs for repairs to the building, insurance, or taxes may pass through you as a tenant;
  • Whether the landlord has any rights to terminate the lease early in favor of a more attractive tenant, thereby leaving your business without a location;
  • If there are any restrictions on subleasing all or part of your commercial space–many business owners may want to rent out any unused space to other businesses;
  • Whether you may be held personally liable if your business is unable to pay rent or other costs required under the lease agreement;
  • Any clauses that may put restrictions on the way you use the property that may impede the future success of your operations, known as “use” clauses; and
  • Whether you can get “exclusive use” rights that disallow any other businesses like yours in the same development to avoid direct competition.

Too many business owners simply sign commercial leases without realizing there may be unfavorable terms. Often they will not recognize their mistake until it is too late and they are facing significant unexpected expenses or restrictions. Having a skilled business lawyer who understands California law review your commercial lease can help guarantee success in your new location.

Call our San Jose Business Attorneys Today

If you need assistance reviewing a commercial lease, other types of contracts, or with any other aspect of your business, please call Structure Law Group at 408-441-7500 today.

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