Jump to Section
A commercial lease negotiation checklist is an effective instrument used by lessees and landlords when signing a commercial lease agreement. In addition, this checklist strives to ensure that all important matters are addressed and that all parties consent before executing the commercial lease. A well-negotiated commercial lease can help avoid prospective conflicts and ensure that the tenancy benefits both the owner and the lessee.
Essential Components of a Commercial Lease Negotiation Checklist
While negotiating a commercial lease can be a complicated and time-consuming procedure, it is essential for companies looking to secure the right space to fulfill their requirements. Also, to help ensure that you get the most promising deal possible, it is necessary to have a checklist of the key elements to consider during the negotiation process. Below are some principal elements to include in your commercial lease negotiation checklist.
-
Location of the Proposed Commercial Space
The location of your commercial space is essential to your company's success. You want to ensure that you remain located in an area that is easily accessible to your target clients and employees. Hence it is necessary to incorporate the commercial property's location in the checklist and consider the proximity to road networks, public transportation, and other amenities such as restaurants and shops.
-
Rent and Rent Increment
Rent is one of the largest expenditures a company will face, and it's essential to ensure that the rent amount is affordable and reasonable. When drafting a commercial lease negotiation checklist, understand the rent provisions, including the initial rent, any increments, and the frequency of rent increments. Consider asking for a rent-free period or an upper limit on rent increases to safeguard your business against possible rent spikes.
-
Commercial Lease Term
When preparing a commercial lease negotiation checklist, the lease term is important. While a longer commercial lease duration provides stability and predictability, it ties you to the property for a longer period. On the other hand, a shorter lease term provides more flexibility but may result in higher rent and restricted possibilities for lease renewal. In addition, you must consider your company's growth potential and how your requirements may vary over time when deciding on the lease period.
-
Common Area Maintenance
The fourth point commercial lease negotiation checklist includes common area maintenance (CAM). CAM, also known as common area maintenance, is the cost of maintaining and using common building areas, such as elevators, lobbies, and restrooms. Lessees should understand what CAM expenses are incorporated in the lease agreement and what expenditures they will be responsible for settling. It is also necessary to determine whether the CAM expenditures are appropriate and whether they are subject to modification over time.
-
Alterations and Improvements
If you plan to modify the commercial space, it is essential to comprehend the lease terms regarding enhancements and alterations. It can include installing fixtures, painting, or modifying the layout. Also, you must ensure that you understand who will be responsible for the cost of these modifications and whether you can change the space if your company needs to change.
-
Operating Expenses
Operating expenses can greatly affect your company's bottom line, so you must comprehend what expenditures you will be accountable for when negotiating a commercial lease. These expenses include property taxes, utilities, insurance, and maintenance costs.
-
Security Deposit
Another item on the commercial lease negotiation checklist is the security deposit. The security deposit is a sum of money the lessee must pay the lessor as security for the lease agreement. Tenants should be aware of the amount of the security deposit and the conditions under which it will be returned to the lessee at the end of the commercial lease term. It is also necessary to determine whether the security deposit is non-refundable or refundable.
-
Subleasing
Subleasing can allow a company to create extra revenue or share the expense of the commercial space. Nevertheless, it's important to comprehend the lease terms regarding subletting, including who will be accountable for finding a subtenant and what constraints may apply. Assess whether subleasing is an alternative for your business and whether it is something that you will need to negotiate into the commercial lease.
-
Parking
Access to satisfactory parking is crucial for many companies, so include the parking situation in a commercial lease negotiation checklist. This point can comprise the availability of off-site parking, on-site parking, or street parking. Consider the requirements of your employees, clients, and vendors when deciding on parking arrangements.
-
Leasehold Modifications
The final item on the commercial lease negotiation checklist is leasehold improvements. Leasehold improvements are the modifications the lessee can make to the commercial space, such as painting the walls, installing new fixtures, or new flooring. Furthermore, lessees should be aware of the expense of the leasehold modifications and who will be accountable for paying for them. It is also important to decide whether the leasehold improvements will remain in the space when the commercial lease term ends.
Key Terms
- Rent Escalation: A requirement in the lease contract that defines how the rent will rise over time.
- Renewal Options: The prerequisites allow the lessee to renew the lease agreement after the lease period has lapsed.
- Tenant Improvements: Modifications or additions made to the property by the lessee, for which the lessee may be entitled to a refund from the landlord.
- Subleasing: The process by which the tenant rents out a portion of the property to another party.
- Use Limitations: Requirements in the lease agreement specify the property's permissible uses.
- Subordination and Assignment: Provisions in the lease agreement allow the lessee to transfer their lease to another person or give priority to other creditors in the event of insolvency or bankruptcy.
- Insurance Prerequisites: Provisions in the lease contract require the lessee to obtain and retain certain insurance policies.
- Maintenance and Repair Obligations: Provisions in the lease agreement summarize the obligations of the landlord and lessee for maintaining and repairing the property.
Conclusion
To summarize, a well-negotiated commercial lease agreement can be the difference between success and failure for a company. A commercial lease negotiation checklist can help guarantee that all elements of the lease agreement are evaluated and managed. And by assessing each key point, a lessee can ensure that the commercial lease agreement is in their best interests and safeguards their company from potential liabilities. Moreover, it is necessary to consult a professional real estate lawyer to review the lease agreement before signing it to ensure that the lease terms are fair and reasonable.
If you are looking to get free pricing proposals from vetted lawyers that are 60% less than typical law firms, you can Click here to get started. By comparing multiple proposals for free, you can save the time and stress of finding a quality lawyer for your business needs.
Meet some of our Commercial Lease Negotiation Checklist Lawyers
Erdal T.
Erdal Turnacioglu of Erdal Employment Law focuses on providing employment solutions to both employees and businesses, whether through litigation, review of employee handbooks, workplace investigations, or training seminars.
Charlton M.
Charlton Messer helps businesses and their owners with general counsel and contract drafting services. He has helped over 500 businesses with their legal needs across a variety of industries in nearly a decade of practice.
Dan "Dragan" I.
I received a bachelor’s degree in philosophy from Northwestern University in 1996 and then got my JD at University of Illinois College of Law in 1999. I have been a lawyer helping people with legal issues in the United States and Internationally since then. That includes litigation as well as contracts/transactions. I am also passionate about helping small and medium businesses with trademark registration and trademark-related legal projects. The law can be confusing and complicated for people, and I am passionate about providing professional legal services to my clients while simultaneously making the legal process less confusing and stressful for them. My goal is to help clients navigate through both good and difficult times by tailoring my skills, experience, and services to their specific needs. I am currently licensed and authorized to practice before the Illinois courts and the United States District Court for the Northern District of Illinois. Internationally I am one of a select few American attorneys licensed and authorized to practice before the United Nations ICTY/IRMCT, the International Criminal Court, and the State Court of Bosnia-Herzegovina. Clients have retained me internationally alongside local counsel in several European countries, Australia, and Africa in private legal matters. I have also been appointed by the United Nations to represent persons at the ICTY/IRMCT and chosen by indigent accused to represent them. Since 2009 my law firm has handled domestic and international cases, including Trial litigation (including Commercial, Premises Liability, Personal Injury, Criminal Defense, and General Litigation) and Transactional work (Contracts, Corporate formation, and Real Estate Transactions). I enjoy helping less experienced practitioners and students evolve and improve. I served as an instructor/lecturer on Oral Advocacy and Trial Practice for the participants of the ADC-ICT & ICLB Mock Trial since 2014, and have presented Advocacy Training lectures for the ADC-ICT on several topics as well as regularly lecturing to visiting University and Bar groups from around the world. If you or a loved one have a legal matter of importance, let's see if I can help you with it!
Valerie L.
Current practice includes: employment law, family law, business law and personal injury.
September 19, 2022
Max L.
Hi there. My practice focuses on several aspects of business law, including business entity formation and organizational documents, trademark and copyright, tax disputes, and contracts. I work with quite a few creative entrepreneurs, such as photographers, artists, and musicians.
October 1, 2022
Tina T.
I am a New Mexico licensed attorney with many years of world experience in real estate, transactional law, social security disability law, immigration law, consumer law, and estate planning.
December 27, 2022
Brent W.
Brent has been in practice since 2007 and been the principal attorney and owner of The Walker Firm, LLC since 2014. Brent focuses on providing an array of general counsel services to individuals and companies in a variety of industries.
Find the best lawyer for your project
Browse Lawyers NowHow It Works
Real Estate lawyers by top cities
- Austin Real Estate Lawyers
- Boston Real Estate Lawyers
- Chicago Real Estate Lawyers
- Dallas Real Estate Lawyers
- Denver Real Estate Lawyers
- Houston Real Estate Lawyers
- Los Angeles Real Estate Lawyers
- New York Real Estate Lawyers
- Phoenix Real Estate Lawyers
- San Diego Real Estate Lawyers
- Tampa Real Estate Lawyers
Commercial Lease Negotiation Checklist lawyers by city
- Austin Commercial Lease Negotiation Checklist Lawyers
- Boston Commercial Lease Negotiation Checklist Lawyers
- Chicago Commercial Lease Negotiation Checklist Lawyers
- Dallas Commercial Lease Negotiation Checklist Lawyers
- Denver Commercial Lease Negotiation Checklist Lawyers
- Houston Commercial Lease Negotiation Checklist Lawyers
- Los Angeles Commercial Lease Negotiation Checklist Lawyers
- New York Commercial Lease Negotiation Checklist Lawyers
- Phoenix Commercial Lease Negotiation Checklist Lawyers
- San Diego Commercial Lease Negotiation Checklist Lawyers
- Tampa Commercial Lease Negotiation Checklist Lawyers
related contracts
- Addendum to Lease
- ALTA Statement
- Apartment Lease
- Apartment Rental Agreement
- Assignment of Lease
- Boundary Line Agreement
- Brokerage Agreement
- Building Contract
- Building Lease
- Business Office Lease Agreement
other helpful articles
- How much does it cost to draft a contract?
- Do Contract Lawyers Use Templates?
- How do Contract Lawyers charge?
- Business Contract Lawyers: How Can They Help?
- What to look for when hiring a lawyer
Quick, user friendly and one of the better ways I've come across to get ahold of lawyers willing to take new clients.
View Trustpilot ReviewContracts Counsel was incredibly helpful and easy to use. I submitted a project for a lawyer's help within a day I had received over 6 proposals from qualified lawyers. I submitted a bid that works best for my business and we went forward with the project.
View Trustpilot ReviewI never knew how difficult it was to obtain representation or a lawyer, and ContractsCounsel was EXACTLY the type of service I was hoping for when I was in a pinch. Working with their service was efficient, effective and made me feel in control. Thank you so much and should I ever need attorney services down the road, I'll certainly be a repeat customer.
View Trustpilot ReviewI got 5 bids within 24h of posting my project. I choose the person who provided the most detailed and relevant intro letter, highlighting their experience relevant to my project. I am very satisfied with the outcome and quality of the two agreements that were produced, they actually far exceed my expectations.
View Trustpilot Review