Negotiating a commercial lease can feel a bit like a game of chess. Neither party wants to be put in check and risk signing away on a less-than-ideal deal. That’s why it’s imperative to work with a commercial real estate attorney while negotiating a commercial lease.
What to Know About Commercial Lease Agreements
Unlike most residential lease agreements, commercial lease agreements are negotiable, and there are many provisions within the agreement that should be negotiated, especially because commercial leases tend to be long term agreements.
Each lease agreement will be specific to a given property and business, but there is wide latitude in how compromises are reached. Your attorney will look closely during a commercial lease review to ensure your best interests as a tenant or landlord are protected.
Key Provisions to Look For During a Lease Review
During a lease review, it’s the details that matter. Here are a few specific provisions tenants in Miami should be sure to pay attention to. Ask your attorney for clarification on anything you don’t fully understand.
- Payment structure and responsibilities – What payments are you responsible for each month and does that cover non-rent expenses like utilities or insurance? Property insurance can be a whole other issue in South Florida so knowing who’s responsible for what coverage on the commercial building is a must. Additionally, you want to read closely about any rent adjustments included in the contract.
- Common area maintenance (CAM) charges – Commercial properties are often leased out to multiple tenants who share common spaces, such as hallways, bathrooms, etc. Review if there is a maximum cap on CAM charges and how your share will be calculated.
- Use of the premises/use restrictions – It’s generally in a tenant’s best interest to request a broad description when it comes to the use of the premises and also to negotiate an exclusive right to use the property. This helps limit direct competition.
- Exit strategies – Because commercial leases can carry long term lengths, planning an exit strategy is important. Consider including an early termination clause in the agreement or the ability to assign or sublet the lease.
- Personal guarantee – Some lease agreements may require you to provide a personal guarantee on the lease agreement in the event that your corporate entity were to fold or not be able to meet your lease obligations. It’s in your best interest not to do this. We recommend speaking with an experienced commercial real estate attorney before taking any action.
These provisions are a few of the many components of a Florida commercial lease agreement, and each item can bear significant importance on your overall contract. Before signing any commercial lease agreement, give us a call at the Law Offices of Alex D. Sirulnik, P.A. We will help you review and negotiate a strong and favorable lease agreement for your Florida business.