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4 things tenants should be wary of in a commercial lease

On Behalf of | Sep 26, 2023 | Property Law

The right location can increase your success as a Texas entrepreneur by bringing in more customers or allowing you to expand operations. You may be eager to sign your lease and move in, but it is generally unwise to do so in haste.

Unfortunately, some commercial leases favor the landlord over the tenant. Before putting your name on the bottom line, ensure the lease does not have any of the unfair provisions below.

Unclear or ambiguous terms

A lease should be concise, yet it must clearly define the rights and obligations of the owner and the tenant. If there is anything in the lease you do not understand, ask the landlord to explain it to you before signing.

Unreasonable use restrictions

Commercial leases may contain unfair use clauses restricting the type of business you can operate. If the agreement poses restrictions that make you uncomfortable, try to negotiate them out or seek a different location.

Excessive rent increases

Leases usually describe how and when the tenant’s rent will rise. These increases should be reasonable and predictable, so think twice if the agreement allows the landlord to raise the rent excessively or without notice.

Unfair termination clause

A lease should have reasonable termination provisions. Consider it a red flag if the document contains language allowing the landlord to end your lease early or without cause. Further, ensure you will not face excessive penalties if you need to terminate the lease early.

Contracts, including commercial lease agreements, are binding documents. The wrong wording can shift the balance of power to favor one party over the other. It’s wise to have legal guidance when reviewing them to ensure they do not contain phrases or terms that could harm your business.