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1. Commercial Leases  

Commercial leases can be very dangerous unless worded correctly to protect you. Leasing a commercial space instead of committing yourself to owning commercial real estate can be an excellent move; however, there are fewer tenant-friendly laws when it comes to commercial leases and no standard lease agreements. You'll need a lawyer’s help to negotiate the best deal on a commercial lease. Every commercial lease should be in writing and should include the following details:

RENT DUE - including any increases (called escalations). You’ll want to know the going rate for space in the neighborhood before you begin negotiating. It also helps to let the landlord make the first offer, and ask for a lower rent than you think you can get initially. Escalations should be for specific dollar amounts or tied to a known method of calculation, such as cost of living indexes.

LEASE TERM - when it begins and under what conditions you can renew the lease. A shorter lease means less commitment, but less predictability for the long run. If location is very important — for example, if you have a retail store — you may want to opt for a longer lease. You can always attempt to renegotiate lower rents or improvements as time goes on. If you have a month-to-month lease, you’ll want to make sure the landlord has to give you as much time as possible when terminating the lease.

UTILITY SPECIFICATIONS - such as phone, electricity and water, or whether you’ll be charged for these items separately. Whether you’ll be responsible for paying any of the landlord’s maintenance expenses, property taxes and insurance costs, and if so, how they’ll be calculated.

DEPOSIT REQUIREMENTS - and whether you can use a letter of credit instead of cash.

SPACE DESCRIPTION - you’re renting, square footage, available parking and other amenities.

LISTING OF IMPROVEMENTS - the landlord will make to the space before you move in. Your landlord may be more willing to make lots of expensive improvements if you’re signing a longer lease.

REPRESENTATIONS MADE BY LANDLORD - or leasing agent, such as amount of foot traffic, average utility costs, restrictions on the landlord renting to competitors (such as in a shopping mall), compliance with Americans With Disabilities Act requirements and so forth. These may come in handy later when you want to renegotiate your lease.

SUFFICIENT ZONING VERIFICATION - for your type of business. Of course, you’ll also want to check out this information with local zoning authorities.

SUBLEASE ABILITY AND ASSIGNMENT PROVISION - to someone else, and if so, under what conditions. You’ll want to negotiate the ability to sublease so that you can move with as little financial pain as possible.

TERMINATION and the consequences.

Renegotiating your commercial lease requires legal guidance. You’ll want to document your reasons for a lower rent or more space improvements with hard facts regarding lower foot traffic than represented, a downturn in your industry and so forth. Some landlords will even be willing to take a percentage of your sales instead of a flat rental fee when economic times are slow. As a tenant, you have far more leeway when negotiating a commercial lease than with a residential lease, which is one reason why having your own lawyer to represent you in negotiations is so important. A lawyer can also research zoning laws and local ordinances and fill you in on local real estate market conditions and customs.

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