Commercial Lease Review Lawyer

Most commercial leases are complex and lengthy. Hence, a lawyer with experience in commercial leasing matters can review your lease and help you understand your lease so that you to may negotiate your lease to better meet your business’ needs. For example, most commercial leases involve net rent plus operating costs. In this situation, it is important that you obtain a history of the operating costs for the space and that you have a good assurance as to what to expect during the lease term. Moreover, you should research and have an idea as to the market rate for space before you start bargaining on a specific location. If you want to sell your business sometime in the future, you should also be aware of how you can do that without being unfairly restricted by your landlord.

Are you struggling to understand the legal jargon used in commercial lease agreements? As legal professionals, we have met many small business owners who skipped important commercial provisions in their leases that adversely affected their businesses long term. These legal documents are never standard, and they vary significantly from one commercial business to another. That’s why reviewing them is complicated even for an experienced business owner. The document may contain minor variations that could easily be overlooked and cost the business a lot in the future.

The commercial lease review process

As a tenant, you will need an experienced lawyer to discuss the details and particulars of your lease before you sign. The legal professional will perform a detailed review of the commercial lease agreement given to you by the landlord. This review process helps small business owners to understand their priorities and, in most cases, request for revisions to the lease. Our lawyers can also help tenants to make negotiations with the goal of signing a mutually agreeable document.

The offer to lease/letter of intent

Before a long lease is drafted, the landlord and tenant sign a document with a summary of the terms and conditions of the main lease. This document is commonly known as an offer to lease or an intent to lease. In this initial draft, most details of the lease are not included. However, tenants should have a legal professional reviewing this document as it may have certain provisions that have financial implications for the tenant.

Important provisions in a commercial lease

Leasehold improvements: As a small business owner, you may be required to pay for the cost of tearing out any modifications that were made to the commercial space at the end of your lease. Don’t simply assume that these modifications belong to the landlord.

Monthly rentals escalation: This specifies how your rental cost will increase during the term of the lease.

Assignment restrictions: Your lease may prevent you from having a different person occupy the premises when you sell the business in future.

Use clause: This stipulated how you can utilize the space, including the lines of business permitted, office hours and other restrictions such as advertising on the premises.

Exclusive use clause: This clause may restrict other businesses within your industry from occupying space in your building.

Renewal clause: This clause stipulates the steps to be taken when renewing the lease at the end of the term.

The long lease: gross lease vs net lease

Tenants who enter a gross lease are only required to pay a fixed rental cost, whereas the landlord will cater to all property costs such as insurance, repairs, maintenance, and property taxes. The landlord usually factors in all these anticipated property costs in the rental amount which the tenant will pay. On the other hand, if you enter a net lease, you will be required to pay the fixed rental cost in addition to property costs, which will be specified in your lease document. There are many other types of leases, such as ground leases, building leases and solar rooftop leases which come with some unique considerations. By engaging our corporate and business lawyers in Toronto who have experience in these types of leases, you’ll get all the help you need to achieve a successful outcome that protects your business in the long run.