Top 10 Reasons to have a lawyer review your commercial lease


Reason #1: The landlord drafted your lease and is protecting itself, not you! This means that every provision in the lease that can be skewed towards the landlord, is skewed towards the landlord.

Reason #2: For accuracy.  Leases are often voluminous and the landlord or property management company doesn’t always carefully change all the required information to reflect YOUR lease that you negotiated.  

Reason #3: CAMs. Common Area Maintenance fees.  Most businesses with an existing lease know about CAM, it's sort of like HOA fees for commercial properties.  All tenants of a particular space or center share in the cost of landscaping, lighting, security, parking lot repairs etc.  Often these fees will be based on a percentage of tenants, the more tenants teh landlord has, the lower your fees, but if tenants move out then your CAM increases. Unfortunately, if a property is not maintained well by the landlord and tenants move out as a result or if a tenant neighbor's business fails, then your expenses unexpectedly rise. I can help negotiate your lease to be sure that your CAMs are dependent on the total rentable square feet, not the total rented square feet.  Also, you can ask for a report of last year's CAMs to be sure that the fees are reasonable for your business plan.

Reason #4:  Personal Guarantees.  If you have a business entity like an LLC for your business, a personal guaranty eliminates any protection your entity might provide against someone suing your business and attaching your personal assets.  These are often buried deep in a lease agreement and clients sometimes don’t even know they’ve signed them.

Reason #5: Don’t let them rent to your competition.  Make sure your lease has an exclusivity clause and prohibits the landlord from renting to your direct competition. (Imagine the competition between two hair salons, coffee shops, or bakeries in the same complex!)

Reason #6: Don’t let them rent to someone who will ruin your business.  Maybe a bikini waxing salon wouldn't be the best neighbor for an afterschool tutoring business; and a yoga studio might not appreciate a pet store next door. Make sure the landlord doesn’t rent to someone who will generate images, noises or smells that will kill your business.

Reason #7: Be proactive. Hiring an attorney to review your lease shows the landlord that you are a serious business owner that cannot be pushed around. Some (not all) landlords take advantage of their relative strength and bargaining power to include provisions in your lease that are egregious. This often stops if the landlord knows the tenant has a lawyer. I can see through scare tactics and translate the lease language so they can’t sneak anything by you.

Reason #8: Landlords sometimes like lawyers.  I know, nobody likes lawyers, but sometimes landlords are dealing with many properties and many tenants calling and e-mailing with questions that they prefer to deal with someone that "speaks the language."

Reason #9: Lawyers can sometimes negotiate better terms.  Whether it’s putting an expiration date on the personal guaranty or making sure your CAM charges are properly calculated or ensuring that if they want to move your location to the opposite end of the complex because Wal-Mart wants to expand, they pay you for your moving expenses and renegotiate your rent (yes, this can happen, and often the lease will have no compensation or "thank you for your trouble" reimbursement).

Reason #10: Cost/benefit analysis.  Most commercial leases are for at least three years, sometimes five or ten. In the current market, if you’re asked to paying less than $1,000 a month rent you’re in the minority.  It is well worth the investment of less than one month’s rent to have a lawyer look over the lease that commits you to three years or more.  Once signed, you’re bound to each and every provision and if you breach, there may be penalties and attorneys fees to pay also.  Make sure you understand all the terms for performance under the lease and how to get out of the lease if needed.

Incidentally, anytime something significant happens that might affect your lease, you should talk to a lawyer. (For example, the complex goes into foreclosure and the property management company stops maintenance, typically a lease would require you to put those complaints in writing to the property manager, who has a specific time to fix it. If they don't, they have breached and you can get out of your lease).


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