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Clauses in your commercial lease that may require negotiation

On Behalf of | Dec 7, 2021 | Property Law

If you’re leasing a commercial space, the lease agreement you have to sign is likely long, complex and filled with legalese. However, it’s crucial to understand what has been presented to you and to negotiate terms where you need to because this is the agreement you’ll be held to for the length of the lease.

There are a number of “standard” clauses in most commercial leases. However, that doesn’t mean you have to accept them at face value. You have a right to at least seek changes from the property owner. You may need to explain why these changes are important to you and perhaps give in on something that’s not important to you.

Key clauses that require careful review

Among the clauses you’ll find in just about every commercial lease agreement are the following:

  • Rent escalation: How, when (based on what circumstances) and by how much your rent can be raised during the term of the lease?
  • Renewal: What do you need to do to renew (or not renew) you lease at the end of the term?
  • Sublease: Can you sublease part or all of your space to someone else?
  • Use: A use clause places limits on how the space can be used. For example, what kind of business can you operate? What kind of signage can you place around your space? What hours can you be open for business?
  • Improvements and alterations: What steps do you need to take to seek upgrades or changes to the space, and who pays for them?

It’s always wise to seek experienced legal guidance before signing any commercial lease so that you aren’t agreeing to something you don’t intend to. This also gives you the best opportunity for negotiating terms that will be advantageous to the growth and success of your business.