Wed, February 21, 2024

Do’s and Don’ts of Commercial Leasing

Each month, ABD will interview J. Brian King – our Business Attorney, about a business law topic. Yesterday, we asked him a few questions about leases for entrepreneurs. We think our readers will benefit from his legal insight and advice.

ABD: What advice would you give a new entrepreneur about leasing a location for their business?

Brian: First of all, do some research on the type of rental space you think you need in the market where you want to be located. Find out what the going rate is for such space in that particular market. For example, usually the range of rent for warehouse space is cheaper per square foot than office space. There can even be different ranges for different types of office space. For example, medical office space can be more expensive due to differing needs for treating patients.

To get a general idea about information regarding the market, you could run some searches online looking at different listings for available property. To obtain additional information about the commercial real estate market, you should contact a real estate broker to represent you in your search. If a property is already listed with a real estate broker, the landlord usually pays any real estate broker commission, both for the landlord’s broker and the tenant’s broker. It is wise to hire a real estate broker before contacting a landlord’s broker since the landlord’s broker does not represent you.

ABD: How can a business attorney help an entrepreneur who’s interested in leasing a property?

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Brian: Once a property is located, or at least narrowed down to about two properties, it is time to hire a good business attorney to review the lease if you don’t already have one. A good business attorney can help pinpoint potential problems and help identify certain provisions that may need to be removed, added, or negotiated. Good business attorneys are familiar with commercial lease terms and have dealt with problems that have arisen in the past. They can also draft key provisions and negotiate on your behalf to get you a much better deal than you otherwise could and help avoid costly problems in the future.

ABD: What should a business owner do if the landlord isn’t abiding by the terms of the lease?

Brian: A business owner should first contact the landlord about the tenant’s concerns. If this is done over the phone or in person, the conversation should be confirmed in writing, setting forth what the concerns were, what was discussed, and how the concerns will be addressed following the conversation. If things do not improve shortly thereafter, a good business attorney should be hired to review the lease, provide advice regarding the respective rights and responsibilities, and follow up with the landlord. Many times, a good business attorney can work things out amicably with the landlord or the landlord’s attorney. And if not, a lawsuit can be filed. Generally, the lease terms will control the relationship between the landlord and tenant, and the court will enforce the terms of the lease.

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