How to Ensure That a New Commercial Lease Is in Your Favour

Before you enter into a commercial lease of any kind, you should go through the text with a fine-tooth comb. After all, no two lease documents are the same, and it's far from unusual for a landlord to push the envelope to an extent. They may try to gain an advantage and reduce their obligations in some way. So, what are the key things to look out for if you are looking to take possession of a commercial property?

Break Clauses

Landlords love continuity, and they may try to box you in by insisting on a longer lease term than you may be comfortable with. As the business world is very uncertain right now, it's a good idea for both parties to have the flexibility, and in this case, you may want to negotiate what is known as a "break clause." This type of language will give you the option to terminate the lease, so long as you give written notice to the landlord by a particular date. Unless you exercise the break clause, the lease will continue as normal, and in order to take advantage of this type of agreement, you will have to keep up-to-date with all the other obligations stated in the lease.

Subletting Options

Try and get permission from the landlord to sublet the lease, should you run into unforeseen problems. For one reason or another, it may not be practical for you to continue occupying the premises, but rather than defaulting on the lease and having to pay damages, this type of clause will allow you to find another party to take it over. Of course, that party would need to be a suitable tenant and be acceptable to the landlord, but if so, this could represent a win-win situation for all concerned. If such a clause is included in a draft lease presented to you, look at the wording carefully. Ensure that the landlord cannot withhold their consent without good reason or drag their feet when time is of the essence.

Rent Reviews

Be careful when it comes to annual rent reviews. This is definitely a favoured clause for landlords, but you'll want to ensure that you have some control as well. One way to do this is to ensure that the review can only be linked to the retail price index and cannot be at the landlord's discretion. Otherwise, you may be faced with a huge increase in your rent next year and have no other option but to pay it or default.

The Best Approach

If you don't have much experience around commercial leases, talk with your lawyer. Get them to review and suggest additions or alterations before you even think about signing.

For more information on commercial leases, contact a professional near you.

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