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Are these provisions included in your commercial lease?

Most businesses must eventually expand to include at least one actual brick-and-mortar location. When attempting to determine the best office or retail space to lease, most business owners focus solely on location and cost. While certainly important, there are also provisions that may or may not be included in a commercial lease that can both negatively or positively impact a business' success and overall bottom-line.

Commercial lease agreements can be notoriously complicated and convoluted. To avoid unexpected costs or unpleasant surprises down the road, business owners are advised to ensure that they have an attorney who handles commercial real estate matters review and assist in the negotiation of a lease contract.

In many cases, a building's owner will be willing to negotiate the terms of a contract. The following are some of the more common provisions that a business owner may choose to request be included in a lease.

  • Competition clause - Language that prevents a building's owner and/or landlord leasing space within the building to a company that provides similar services or products.
  • Condemnation clause - Protects the rights of a tenant to financial reimbursement and lease termination in the event the building or leased space is destroyed by a fire, flood or some other disaster.
  • Escalation clause - Provides the duration and terms by which a landlord must abide with regard to rent increases as well as clear provisions as to how any related disputes may be remedied.
  • Maintenance and repairs clause - Clearly defines the financial responsibilities of both parties with regard to costs associated with any repairs or maintenance.
  • Tenant "going dark" rights - Provides tenant with option to close or receive lease reductions in the event other tenants go out of business. This clause is especially important for retail businesses.

Additional clauses that are wise to ensure are included in a commercial lease include those related to taxes, use of premise, subletting, landlord's solvency and utilities.

Source: FindLaw.com, "Commercial Lease Provisions," Jan. 6, 2016

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