Should I Hire a Lawyer for a Commercial Lease Agreement?

Use these links to jump to different sections:

• Why Get a Lawyer to Review a Commerical Lease
• Legal Review of Lease Terms
• Finding Legal Advice on Landlord-Tenant Law

Commercial real estate is one of the engines of the American economy. Companies entering a commercial lease agreement have a lot on the line, and it’s important to take the time to get things right. Both lessees and lessors of commercial rental property need to know their legal rights regarding the rental lease and the impact of laws and regulations, be they the local housing code, state laws, or federal law.

Business owners should have a lawyer review a commercial lease agreement to ensure the terms are fair, legally compliant, and aligned with their interests and legal rights.

Why Get a Lawyer to Review a Commerical Lease

If legal disputes arise between landlords and tenants, state laws generally defer to the plain meaning of the rental agreement. With limited exceptions, the agreed-upon terms contained in the agreement will be enforceable. This is why it’s essential to ensure the lease terms are aligned with your interests from the start. The best way to do this is through legal review.

Legal Review of Lease Terms

Here are four key terms to look out for in a commercial lease:

1. Rental Payments and Other Costs

First and foremost, you need to calculate the total cost of the lease. Of course, this starts with clarifying your monthly rent payments and whether there may be rent increases. Beyond that, you should also carefully consider any other costs. For example, make sure you know who is responsible for all utilities, any late fees, and how much the security deposit is.

2. Duration of Lease and Early Termination/Renewal

Next, you should evaluate the duration of the lease agreement. For the most part, residential lease agreements are for a 12-month lease or less. Commercial lease agreements are more variable. Some lease terms are multi-year periods. You should also review the procedures for early termination and renewal of the lease, such as written notice and how many days’ notice you must give. Businesses need to know their options in case they want to leave the agreement or extend the agreement for another term.

3. Your Right to Use and Modify the Property

A rental contract should explain what you can (and cannot) do with the property. For example, imagine that you own and operate a restaurant and want to knock out a wall to expand part of your kitchen. Are you allowed to do that? Do you need to get approval from your landlord? The commercial lease agreement should clarify exactly how this works. Residential lease agreements will also address various property uses, such as whether you can sublease.

4. Dispute Resolution Provisions

Finally, it is always important to consider dispute resolution provisions. Ideally, your business will never be involved in a dispute with your commercial landlord. However, that cannot be guaranteed. If a disagreement does arise, the lease agreement may govern the dispute. As an example, some commercial lease agreements call for mandatory arbitration.

Finding Legal Advice on Landlord-Tenant Law

With a commercial lease, the importance of taking the time to understand the terms and ensure that they are well-suited for your needs cannot be overstated. You should not hesitate to seek professional guidance and support. A real estate attorney with experience representing commercial clients can help you negotiate, draft, and review your lease.

For more information on this area of law and the landlord-tenant relationship, see our commercial real estate overview.