Many clients come to us and wonder whether it’s a good idea for them to sign their commercial lease. Below are some things that an experienced real estate attorney can help you consider if you’re are signing a commercial lease.
10 Things to Know Before You Sign a Commercial Lease
1. Basic Terms of the Lease
Are the basic terms of the lease correctly stated? Details such as dates, names of parties, premises description (ask for a drawing, if available), term, rent, common area charges, security deposit amount, and more should be considered when signing a commercial lease.
2. Renewal, Contraction, or Expansion Rights; Assignment and Subletting
Do you expect to be able to renew, expand, or terminate the lease? Do you want to be able to sublet or assign the lease? All of these issues should be addressed in your lease.
3. Permitted Use
It is important to make sure that the permitted use of the property as stated in the lease is sufficiently broad not only for your immediate purposes, but also if the nature of your business changes.
4. Beyond the Premises
Are there special considerations that need to be made for things such as parking, interior or exterior storage, roof top space, utility access, telecom chases and risers, overhead doors, vaults, overhangs, sidewalk or outdoor patio space, freight elevators, trash enclosures, lobby and other common area space, and backup generators? What about signs? If you want your business name on the directory our outdoor sign, that is another issue that the lease will need to address.
5. Beyond the Base Rent
It is important to make sure that your lease addresses issues such as operating expenses, taxes, insurance, and common area maintenance. Your lease should also make it clear what services are provided by the landlord and which ones are the tenant’s responsibility. Finally, it is important to consider other items that must be paid for on a regular basis in addition to rent, such as parking, storage or other items, after-hours use of the premises (HVAC, utilities, security, parking), relamping, or excess water or electrical use? How will the charges increase each year, and can you get a cap on controllable operating expenses? Is there any right to review or audit such charges?
An experienced real estate attorney can help you make sure that your insurance coverage meets the lease’s minimum requirements. You may need to consult with your risk manager or insurance broker or advisor to review the lease, especially the insurance, damage and destruction, exculpation (release), waiver of subrogation, and indemnity clauses.
It is vital that you or an inspection company thoroughly inspect the premises to ensure its condition meets your expectations and needs.
8. Termination Rights
An attorney can help you make sure you understand what your rights are if the lease is terminated based on a casualty loss, condemnation, foreclosure, or other termination right of the landlord.
9. Commencement Date
Make sure to tell your attorney by what date you absolutely have to be in the premises. Be sure the lease makes the premises available when you need it and that you have adequate remedies if that does not happen.
10. Read the Lease
Perhaps most importantly, even though an attorney is helping you review the lease, make sure that someone in your organization who is going to use the premises and understands your practical needs and has read it to make sure it works for you.
Do You Need Legal Help With A Virginia Real Estate Transaction?
If you need legal assistance with a Virginia real estate transaction you need to speak with an experienced real estate attorney as soon as possible. Contact us online or call our Virginia Beach office directly at 757.490.3500 to schedule your free consultation. We have offices throughout Virginia including Chesapeake, Newport News, Norfolk and Suffolk.