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Understanding the Key Clause Within Commercial Lease

Our Morgan Law Group attorneys in Florida and California know that there are multiple moving parts to running a successful company, and business owners must be engaged in each to ensure they are properly executed.

Whether it is hiring an accountant or partnering with a business contract lawyer, there are key clauses in nearly everything principles sign — including commercial leases.

It is crucial to take the time to review leases carefully. This allows new or expanding business owners to understand what their obligations are under the terms of the lease, as well as the property owner’s duties to the occupant.

Here are a few key provisions all lessees need to know when they are contained in their commercial leases.

What are the Most Common Provisions Outlined in Commercial Leases?

Depending on the type of business and the type of lease, there may be dozens of provisions that can be negotiated between the property owner or management company and the business that is leasing the space.

Some of the most common provisions include:

  • How the Space Will Be Used.
  • Who is Responsible for Improvements and Alterations.
  • Rent Escalation Clause.
  • Subleasing Article.

How the Space Will Be Used

One of the major factors listed in all commercial leases is how the space will be used.

The details and terms of the lease may include the type of businesses allowed, prohibited businesses, and what hours the company can operate.

While this part of the lease may seem straightforward, business owners must be fully aware of whether they make changes to the way they do business, or to their products or services, will the lease allow for the adjustments.

Who is Responsible for Improvements and Alterations to the Space?

In most cases, improvements and alterations will be listed separately in a commercial lease.

Improvements are described as changes to the space before it is ready for use. This clause should state whether the lessee or the property owner pays for them, and how quickly they will be completed.

Alterations are changes that are made after the lessee takes possession of the space. Simply put, if the space requires changes once it is in use, will the property owner need to be notified of the changes first, and must he or she approve them before the modifications can be made?

Is there a Rent Escalation Clause?

One of the most straightforward factors in a commercial lease is how often and how much the property owner can raise there, or if they can at all. This is important, so business owners can plan for the future accordingly, and are never surprised by a rent hike.

Do You Have Permission to Sublease the Space?

The sublease article in a commercial lease states whether the lessee can rent part or all the property to another person or business.

The subleasing clause is important because things can change quickly when you start or expand a business. If your company outgrows the space, and needs to move quickly, subleasing could prevent the company from losing money.

Most Commercial Lease Terms are Negotiable

All Florida and California business owners should be aware that the terms and clauses included in commercial leases are typically negotiable. When you receive the leasing contract, talk to a skilled California or Florida business litigation attorney about its terms and conditions, and note anything you would like to change, so negotiations can begin with the property owner.

Call MLG Business Litigation Attorneys Today to Discuss Your Lease Today

Contact our Morgan Law Group in Florida and California today at (786) 706-9228 for a free case evaluation. We can help you understand your complete legal rights and options during lease negotiations, so you can get the most from the property and its use.