Commercial Lease Review: Why A Lawyer Should Review the Lease Agreement

Before you sign any commercial lease, you should have a lawyer review it first. Leases written by the landlord’s attorney are going to be written in the landlord’s favor. Plus, for those outside the legal profession, the language used in a lease can be confusing.

Those are two of many reasons why it’s smart to talk to a lawyer for lease agreement review first. That way, you can understand what you’re signing, instead of just guessing.

Verify the Contract Is Accurate
The print-out version of a commercial lease can be a bit intimidating. It often has dozens of pages, packed with a lot of legal language that can be hard to understand. With so many details, how can you be sure the contract is accurate?

Your attorney has the experience and eye for detail to make sure the contract is accurate. The review can make sure you are paying for the right location, at the agreed rate, and in the appropriate terms. You don’t want to sign the contract and find out that you agreed to pay for twice the amount of rent than you thought.

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Identify Maintenance Fees
Many commercial buildings come with fees associated with common area maintenance. Known as CAMs, these fees cover the cost of maintenance and repair on common elements. These include the parking lot, landscaping, and lighting. They can also include security and other services.

The lease should identify the CAMs in detail. Ideally, the CAMs in your lease should be based on how many square feet you are renting. Landlords, however, often base those fees on the total square footage rented out. And that can drive your fees up.

For example, you may be renting 2000 square feet out of 15000 available. If your CAMs are only for your square footage, you only pay for the CAMs on 2000 square feet.

However, your lease may require you to pay for CAMs based on your square footage plus a part of any space not rented out. Let’s say only 8,000 square feet out of the 15000 has an active lease. Your CMA fees will be on the 2000 square feet you rented, plus a part of the 7000 square feet that is not rented out.

That’s why a commercial lease review is so important.

Protect Yourself from Personal Guarantees
Some leases require the person signing the lease to give a personal guarantee. That means the landlord can sue you personally, instead of your corporate entity. If the landlord sues, and gets a favorable judgment, he or she can attach your personal assets.

The attorney can identify a personal guarantee hidden deep in the lease details. This offers the chance to get it completely removed or to have it expire at some point in the lease term.

Defend Against Neighboring Businesses
What is stopping your landlord from moving your competition in next door? What about bringing in a business that could ruin yours? The best defense is a lease with terms that protect against these types of situations.

Your attorney can add terms to the lease to protect your business. It could include provisions against renting to your competition. It could include protections against excess noise or other problematic issues like bad odors.

Gain the Professionalism of a Legal Representative
Having an attorney at your side can be a real advantage when you are leasing a commercial property.

Some landlords like to deal with uneducated business owners. It gives them the upper hand in getting preferential lease terms. It also gives the leeway to push their renters around and take advantage of them.

Other landlords have tons of commercial property. They get tired of having to deal with individual renters. They prefer attorneys because they can get the lease handled quickly and professionally.

Get Stronger Negotiating Power
Your attorney will take the time to learn what your business is about and what terms would be in your favor. The attorney can identify what terms aren’t in your favor, as well as what terms to add to protect your business.

Here’s a good example. Some leases have a provision that requires you to move to another location, at your own expense, if a larger tenant wants your space. That’s the type of provision you want an attorney to cross out during a commercial lease review and send it back to the landlord for revision.

With an attorney’s help, you are in a stronger position to negotiate better terms. The attorney can even do the negotiating for you.

Make a Smart Investment
The cost of having a lawyer look at your lease is usually less than the cost of a month’s rent on a commercial lease. Since many of these leases are for 3 to 5 years, the cost of the review is a smart investment. It could end up saving you a ton of money over the life of the lease.

Before you sign any commercial lease, do the smart thing. Talk to a lawyer for lease agreement review. It could save you a lot of headaches and even more money. Don’t let the landlord write the lease in his or her favor. Make sure your attorney reviews it so you know what you’re signing.

Before you sign a commercial lease, let us review the terms.

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Chris Corpus

Founding Partner at Corpus Law Inc

This article does not provide legal advice or create an attorney-client relationship. If you have any questions or would like to learn more about this topic or if you have other legal questions, do not hesitate to contact Chris Corpus, Esq. of Corpus Law Inc at 216-973-2475. Copyright Christopher A. Corpus 2016.