Three Additional Commercial Lease Oversights that can Burn Your Business

In a recent blog post, we discussed the necessity and importance of commercial leases. A commercial lease is the means by which a business secures the right to use particular facilities or premises for business purposes. Since the lease sets forth the language that will govern and control the commercial lease, having the right language in place is essential to your business and its continued operations. The failure to ensure that the lease accurately reflects and protects the agreement you bargained for can result in a space that does not meet your company’s needs, creates additional expenses or costs, or results in lengthy and costly legal disputes.

In the first post, we examined three issues that, if not properly addressed, could introduce uncertainty and disagreement to a business relationship. We discussed the importance of ensuring that the parties are properly and accurately defined in a parties clause. We also discussed the importance of a premises clause that is legally sufficient and accurate. Finally, we discussed how use and exclusive use provision concerns can apply throughout the lease.

In this post, Baltimore real estate attorney William S. Heyman will identify and briefly discuss three additional aspects of a commercial real estate lease that can create significant complications and costs when improperly handled. If you would like to discuss how Mr. Heyman can put his more than 20 years of legal practice experience to work for your business, call the Law Firm of William S. Heyman at (410) 305-9287 today.

Ensure that a Commercial Lease Clearly Defines the Term, Rent, and Your Ability to Make Improvements

Particularly in the case of small business owners and entrepreneurs, that issues with a lease could result in major legal problems is often not considered. This is probably due to the fact that some business owners may oversimplify the issue in their head as being as simple as “x number of years for y dollars.” Of course, the commercial lease will always provide for these basic terms. However, a number of other concerns are also affected by the term clause including when insurance coverage will or must start, when the business can open, and when rent payments must be made. The failure to understand, bargain, and negotiate these items can – at minimum – result in embarrassing errors and mistakes.

Likewise, the rent clause of the commercial lease agreement can also become a pain point due to oversimplifying the issue. The language regarding the amount of rent will certainly address how much you are expected to pay to use the premises, but the language frequently goes far beyond this fact. The language may set forth additional expenses or fees that you must pay as a tenant. The language may include language authorizing rent increases due to problems with the building or after a period of months or years. The language may also include a description of expenses related to common areas.

Finally, a clause relating to improvements and alterations to the premises can frequently become the source of unpleasant news when parties fail to address the concern before it becomes a problem. This clause will typically set forth governing language concerning an array of questions including:

• Does the commercial tenant have a right to make alterations to the property?
• When will work be performed?
• Who will pay for the work?
• Who will perform the work?
• Who is responsible for costs to finish an unfinished space?
• Must the property be returned to its original state at the end of the lease or when the business vacates the lease?

The failure to address these concerns at the outset can result in securing a space that is unsuitable for the business or likely to result in litigation. Addressing these and other concerns as part of a comprehensive attorney review can minimize the likelihood of disputes and litigation.

Work with a Meticulous Baltimore Commercial Real Estate Attorney

For more than 20 years, real estate lawyer William S. Heyman has provided trusted guidance to businesses and corporations in Maryland and throughout the United States. Mr. Heyman can review a commercial lease agreement for potential mistakes, lack of clarity, and other issues that can affect your company’s operations and profitability. To schedule a confidential legal consultation call the Law Firm of William S. Heyman at (410) 305-9287 or schedule a meeting online.