What is a Commercial Lease Review?
A commercial lease review is when a commercial tenant reviews their lease form for any clauses or sections with poor wording that might jeopardize their business. Business operations and types can also be considered during a commercial lease review.
In these economic conditions, it's important to ensure a good landlord and clauses that are clear to all involved protect you in your contract. You do not want to expose your company to an unusually high-risk position.
You'll want to work closely with an experienced real estate attorney and your landlord before finalizing any agreement so that you know what you're getting into.
Here is an article about commercial lease reviews.
Types of Lawyers You Want for a Commercial Lease Review
Real estate attorneys typically handle commercial lease reviews. As a result, they are well-versed in landlord-tenant law. They can help you identify clauses that may contain poor wording or be unacceptable for your business.
Commercial real estate lawyers can advise on what business type would best suit your needs and even review the lease form to ensure it contains all of the necessary clauses for your operation.
Landlords may try to slip clauses into a commercial lease agreement that are aimed in their favor, not yours. For example, some landlords will even include clauses that allow them to cancel a lease if economic conditions change.
Tenants might not notice these additions, but lawyers usually point out this issue during lease review and advise you on how to negotiate it. A real estate attorney is someone who knows landlord-tenant law, which is why they're one of the best types of lawyers for leasing space and reviewing commercial leases.
Here is an article about finding lawyers to review or negotiate your commercial lease.
How Does a Commercial Lease Review Work?
During a commercial lease review, a lawyer reviews your lease agreement to ensure it is in your best interest. This can be important because if any clauses are worded poorly, it could put you in an unusually high-risk position.
You should have a lawyer for lease agreements so they can look over the contract before you sign on the dotted line. They will help you identify clauses that might risk your particular type of business.
Depending on how long the landlord has been negotiating commercial leases, they can take anywhere from ten days to three months or longer to complete. Contact a business real estate attorney today if you need assistance finding affordable office space or negotiating a commercial lease form.
Here is an article that reviews how a commercial lease agreement works.
Key Terms to Review in a Commercial Lease Agreement
If you are a commercial tenant, there are certain key terms that you should review in your lease agreement before signing. These include:
- Clearly Defined Location Description : Some leases are vague about your renting location. Look to see that size and restrictions on the use of property are made clear.
- Insurance Requirements : Many leases require insurance on both the landlord and tenant’s parts. Check to see that the amount of coverage requested by the landlord is reasonable, and make sure it is clarified in the lease. Again, a lawyer would be helpful if this discussion leads to negotiations.
- Renewal Terms: You must ensure the renewal terms align with your business’s growth plan. Check to see how and when the renewal is triggered, and ensure you know any notification requirements to renew.
- Assignment Options : A landlord usually wants the contracting party to be the tenant. However, if your business’s needs change in the future, you need to know if you have the option to sublet or assign the lease to a third party. Here is another opportunity to lean on an expert to learn how to negotiate a commercial lease.
- Indemnity : It is common for landlords to include indemnity terms in the lease. Make sure, if there is an indemnity provision, that it is not on unreasonable terms that clearly favor the landlord.
- Termination/Holdovers: Check to see if there are penalties for early termination of the lease or holdover periods.
Here is an article that helps you understand key terms in a commercial lease agreement.
Why Is It Important for an Attorney to Review Your Commercial Lease
If you are a commercial tenant, it is important to have an attorney review your commercial space lease before signing.
The landlord may try to include clauses that put you in an unusually high-risk position or are not favorable for your business type. A real estate attorney can ensure that these clauses are removed and the language is clear, so you know what you’re getting into before signing the contract.
In addition, they will examine the clauses to determine if they would be too burdensome for your business or will increase the risk.
For example, clauses on early termination of the lease could prevent you from moving out quickly when necessary. It would be in your best interest to also talk to your real estate attorney about any other stipulations you want to include and how those will affect them.
Here is an article on ways a lawyer can help navigate commercial lease negotiations.
How Much Does It Cost to Review a Commercial Lease?
A commercial lease agreement’s cost depends on the lawyer, the business type, and the form of lease. However, commercial tenants should expect to pay between $500 and $1,500 for a commercial lease review.
For small businesses with lower-value leases, that price may be much lower. Real estate lawyers typically charge more for commercial tenant reviews because it takes more time and expertise to negotiate a business lease than a residential one. Smaller businesses tend to need less extensive commercial lease reviews.
Here is an article on things you should consider before signing a commercial lease.
How Do Lawyers Charge for a Commercial Lease Review?
A lawyer can review your commercial lease for a flat fee or an hourly rate.
- Flat Fee Commercial Lease Review: If your business requires ongoing legal advice on other matters, then a flat fee may be better for you because there are no surprise fees after the initial consultation.
- Hourly Rate Commercial Lease Review: If you use a lawyer to review your commercial lease, they will likely charge you an hourly rate. This means you pay for every hour they spend reviewing your contract.
A commercial lease review is important to ensure you are protected. The information in this article can help you understand what you need when reviewing a commercial lease and guide you on what to expect if you hire a lawyer.
Hiring an experienced real estate lawyer is your best bet to ensure your Commercial Lease is correct, concise, and serves your needs.
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