Whether a Phoenix area business owner is starting a new business or moving to a new location, they will most likely have to sign a commercial lease agreement. Many business owners are under the mistaken impression that commercial lease agreements are the same as residential rental agreements and are generally all the same. But this is not the case with commercial lease agreements, and it is important for a business owner to have an attorney review the lease agreement.
Because of the complexities of commercial lease agreements there are several reasons why an attorney should review them:
- Accuracy. An attorney can review the agreement and make sure the terms are what their client agreed upon. This can include rent, square footage, security deposits, renewal period, tenant improvement allowance, etc.
- Use of space. An attorney can review what their client is allowed to do in the space they are leasing. The language may be too narrow as to what commercial activities their client can do. They may also want to add an “exclusive use clause” which would prevent a business of the same type from renting space in the same commercial location.
- Common area maintenance fees. Those who rent commercial spaces are typically required to share the operating expenses of the common areas. This can include lighting, security, parking lot maintenance, etc. A commercial lease agreement should stipulate that common area maintenance fees are based on the total available square feet for rent and not on the total amount of square feet rented.
- Out clauses. Commercial lease agreements typically last for several years and a tenant is required to provide a personal guarantee for the entire term of the lease. But there can be some negotiation made on an “out clause”. This can be if the sales haven’t met a certain level by a set date or a lessee can negotiate the right to sublet the space.
- Terms and conditions. An attorney can negotiate more favorable terms and conditions in a commercial lease agreement.
Having an attorney review a commercial lease agreement and offer feedback and be a valuable opportunity for a business owner to make sure they are getting an agreement that is beneficial for their business.