If you are opening your business, expanding to a larger space, or simply trying a new neighborhood, chances are you will be looking to lease a commercial space. Many business owners find a space they believe is perfect for their company and are ready to sign the lease and get down to business as soon as possible. However, it is essential to remember that lease agreements are legally binding—just like any other type of contract—and if you do not fully understand or review all of the terms, you can end up with an unfavorable lease that could hurt your business.
To protect the interests of your company, you should always have an experienced business attorney who is familiar with contract drafting and can evaluate the terms of your commercial lease before you consider signing it. A lawyer can identify possibly harmful terms, determine if there is room to negotiate for more favorable terms and provide advice on when to walk away from a particular property owner.
The following are some common commercial lease terms that should be carefully considered.
Restricted Use or Exclusive Use
How you are able to use the commercial space is vital to the operation of a business. However, many commercial leases will try to restrict how commercial tenants use their space. Some landlords may be concerned about damage to the property or liability if certain activities take place on their property. Others may have already given exclusive rights to use the space in a certain way to a neighboring tenant. Whatever the reason, you would not want to lease a space for a bakery and later learn the lease prohibits you from using an oven. Always review use restrictions carefully.
Moreover, if you are looking at a space in a multi-unit building, you may want to see if you can negotiate an exclusive use clause. This prohibits any other tenant from conducting the same type of business as you to prevent direct competition in the same building and can be very beneficial.
Rent and Other Expenses
While you may have agreed on a rent amount with the landlord, the lease can contain other clauses regarding the financial obligations of tenants. These can include built-in rent increases, operating costs of the landlord that pass through to tenants, common space maintenance, and more. Make sure you understand all of your obligations under a particular lease.
Alterations to the Property
Many businesses want or need to tailor a space to their specific needs. Often, a lease will require that a landlord sign off on any customized alterations to the space—even if it is an improvement. You can also negotiate who pays for the work and who completes the work on the space.
Contact a New York City Business Law Firm for Assistance
The above are only a few examples of important commercial lease agreement terms that should be reviewed by a skilled NYC business attorney. Please call Braverman Law PC at 212-206-8166 or contact us online if you need assistance with any type of business contract.