Commercial Leasing

Short Summary: Commercial Leases are often presented by the lessor as an adhesion contract (aka a “take it or leave it” contract). Often, prospective landlords will either imply or explicitly state the lease is not negotiable. In reality, there is usually some flexibility that allows for moderate modifications. However, for the most part commercial leases are not negotiated to the same extent that other business contracts are negotiated. For this reason, and because most landlords require the owners of young businesses to personally guarantee company lease obligations, it’s critical that you negotiate those terms that could have a substantial impact on your business or your personal assets.

All businesses that operate a brick and mortar storefront or rent office space are eventually going to have to negotiate a commercial lease. Different rules apply to commercial leasing than those that apply to residential leases. Simply, there is an expectation that the parties to a commercial lease are generally more business savvy and sophisticated than the average residential tenant. As such, many of the protective provisions that apply to residential leases do not apply to commercial leases. Further, because it is not anticipated that a commercial tenant will reside in the commercial space, many of the residential requirements regarding habitability, repairs, and nuisances apply less (or not at all) to commercial leases.

Thus, it is critical that you fully understand the requirements, duties, and rights set forth in your commercial lease. Commercial leases are often drowning in fine print and legalese, and are typically written for the sole benefit of the landlord. To this end, while many of the terms may not be negotiable, simply understanding the terms can help the tenant ensure their own compliance or reject a potential property in favor of another location with more favorable terms.

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