Commercial Lease Agreement Key Terms

In many cases, tenants are responsible for taking out their own liability insurance as well as additional policies to cover office content, including inventory and any rent improvements made during the term of the lease. Often, the lessor indicates a minimum amount of civil liability coverage required in the rental agreement itself. While the owner insures the building for liability and property damage, he has the option of offloading these costs onto the tenants. However, if a landlord chooses to pass on these costs, they will be included in the base rent and not as one of the items considered additional rent. Since leases are long and complex documents, there is a huge amount of leeway for argumentative lawyers to push projects back and forth for many weeks. Nothing draws a lawyer`s attention to the time needed as much as suggesting that he and not his client pays for it. A fixed-price offer is therefore an excellent incentive to effectively conclude your lease. Whether you`re signing your first lease or preparing to move or extend, you need to have a thorough understanding of commercial leases. Unlike residential leases, commercial leases are very “buyers beware”. Their rights are exactly as stated in the rental agreement, with little or no other protective measures. While many residential leases are valid for one year, commercial leases can take much longer, including 5, 10, or even 30 years. When negotiating your commercial lease, be sure to consider not only the initial term, but also the renewal rights. Sometimes the lease grants renewal rights to the tenant, while the lease sometimes requires the reciprocal agreement of the lessor and the tenant before it can be renewed.

And don`t forget to think about what will happen to rents during each extension period! Another possibility is to assign the lease to the new tenant and encourage the lessor to accept the release of the original tenant. This is a more difficult process, as the landlord wants to check the new tenant more thoroughly before forgoing future debts….

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