Whether you are negotiating your first business lease, or your business is moving up in the world and you need to find a new place, remember that you don’t have to sign a standard lease. You always have the option to negotiate a commercial or retail lease.
Don’t risk getting stuck in a lease with terms that are disadvantageous to your business. Know what you need in a space, know what you want in a contract, and get an attorney’s legal review of your prospective commercial or retail business lease agreement before you sign.
In this article we will talk about two aspects of a business lease that the recent pandemic has brought to the forefront: the need for expansion and contraction of space and the importance of maintenance and cleaning services.
Expansion and Contraction Clauses
You’ve probably identified Identify your company’s current and anticipated need for space. How sure are you of this estimate? Might you need to expand, or contract, during the period of the lease? Although commercial landlords are not fond of expansion or contraction clauses in leases, sometimes they can be negotiated.
Let’s say you think you may need to expand. You can ask for the right of first refusal to lease an adjoining unit, or additional space in the same building, but not next door.
A contraction clause could allow the tenant to give unused space back to the landlord (in rentable condition) with enough notice to find a new tenant. Other contraction clause options include the right to sublease or the right to assign the lease to a third party given certain conditions. Subleasing or transfer of the lease could allow your business to move without paying a lease termination penalty.
Under a sublease arrangement, the primary tenant becomes the landlord and is responsible for ensuring that the subtenant meets the original lease obligations. If the subtenant breaches any of the terms of the original lease, the primary tenant (your business) would be held responsible, so this is a riskier option.
Under an assignment arrangement, the new tenant assumes the lease and enters into a contract with the landlord, not you, the primary tenant. You’ve done the work to find a tenant and that’s a benefit to your landlord. While commercial landlords are hesitant to negotiate such agreements the pandemic may have created more wiggle room for negotiations.
The Contract Should Specify Cleaning and Maintenance
The pandemic has demonstrated the importance of the landlord maintaining their property. TA lease should be clear about the level of cleaning the tenant can expect in common areas, cleaning protocols, and the cost of cleaning.
For safety reasons, a prospective renter may also want information about the building’s HVAC air filtration, COVID-screening protocol, and any accommodations for social distancing.
In a fast-changing health situation, commercial and retain landlords and tenants are partners who need to work together.
Ask for a Legal Review of your Commercial Lease Contract
The Fell Law Firm represents retail, commercial and industrial ventures in the Dallas-Richardson-Plano area. Mr. Fell can assist with rental contract negotiations or can provide legal review of a proposed lease agreement. Call 972-450-1418 or complete our online contact form to schedule a consultation.