Avoiding Typical Problems with Commercial Leases with the Help of a Real Estate Lawyer

There are a number of concerns that may arise when starting a commercial lease. It is vital that the documentation signed by the person involved is analyzed thoroughly by a real estate lawyer to ensure the statements are most beneficial for the leaseholder.

There are various clauses placed in these lease files that restrict what may be done on the property, what easements may be permitted, how much expansion is possible and other matters that limit the person obtaining the lease. Negotiation a lease is imperative when buying or leasing a property. With the assistance of a real estate lawyer, many pitfalls may be avoided.

Limitations Should be Negotiated

When examining a lease for commercial property, it is essential that limitations are open or broad so that the person signing the agreement is able to perform the actions and transactions with his or her business as necessary. When these clauses
are overlooked, the business owner or manager may be restricted from accessing certain portions of products, services, locations or similar concerns. Additionally, it is important to determine what limitations are placed on the lease and property when including surrounding companies and land. It is possible to share a shopping center’s lot, but that also restricts how large the business building may be. This means that broad terms should be utilized when signing a lease contract.

It is also important to plan before moving into a prebuilt shopping center when dealing with competitive companies. This means that the location selected may already have the parking lot erected, but there may be another building with the same products or services that could cause either a block on the market or healthy competition to ensure items are sold quicker. The owner or manager should have an exclusive use provision written into the lease to ensure that no other competitors may be on the business lot or land that directly causes revenue loss. This means that the landlord is unable to add another company to the same shopping center which sells the same products or services. However, these clauses are only useful to a leaseholder if the seller owns multiple lots of land or buildings in one location.

Term of Lease Options

When the terms of a lease are favorable, it is often beneficial to extend the options open for the lease termination date. This could alter a lease from being a yearly contract or up to only five year to a longer term as specified between landlord and the leaseholder. This usually provides possibilities in expansion, flexibility and retaining the same location for enough time to build a customer base. It is important that an extension does not affect any other terms of the lease. This means that monetary payments should not be increased just due to the extended time period. However, due to inflation, an increase of up to five percent is standard for longer lease time frames. Clauses should be clear in how an extension is offered without any hidden statements or confusing wording. Other specifics such as updates or maintenance of the property should be concise and clear as well.

Other Obligations

There are often other obligations that are necessary for leaseholders that are not rent related that often accrue payments necessary. These may be utilities, taxes, insurance, and similar matters. It is up to the leaseholder to take care of these concerns, but it should be clearly defined in the commercial lease just what this entails. This means that information in the lease must state what should be applied to the business owner and what the landlord takes care of in these situations. It is vital that documentation is provided for these circumstances to back up any claim if one is necessary.

Need of a Real Estate Lawyer

Leases are contractual agreements between the leaseholder and the landlord that binds the two parties together to the terms provided in the lease. Because of this, a real estate lawyer is imperative throughout the entire dealing. He or she may ensure the documents are beneficial to the owner of the business, are valid with clear and concise statements and do not contain any negative consequences based on certain actions. While the arrangement of the land and building may require additional assistance, it is the lease that must be examined for every detail. The legal professional may aid in avoiding the common and unknown pitfalls that plague commercial leaseholders to include what may affect the land and the shopping center where the business is located.

Provided by HG.org

Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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