Leasing Commercial Space

Kanata CA personal injury, family, and real estate law firm

Q: I run a small business and I am currently in the process of looking for commercial space. Do I need a Lawyer to review the lease?

A commercial lease is a complex legal document. In addition to the usual but important commercial provisions such as the term of the lease and monthly rentals, there are numerous other commercial and legal provisions and terms that may significantly increase costs or may otherwise adversely affect your business.

Most commercial leases are not in a standard form and vary substantially from each other. This significantly complicates review by anyone other than the most experienced business person or professional advisor because even seemingly minor variations may have significant impact on costs or legal rights. A simple example is in respect of the leasehold improvements that a landlord builds for you at the commencement of the lease. You might expect, correctly, that those improvements belong to the landlord at the end of the lease. You might not expect that the lease may provide the Landlord with the option of requiring you to pay the cost of tearing out those improvements at the end of the term – yet some leases provide exactly that. A Landlord has a legitimate interest in knowing who their tenant is, and thus many leases provide for restrictions on assignment. At the same time, you may wish to sell your business sometime in the future, and want to know that you can do so without being unfairly restricted by your landlord. In our experience, most landlords are willing to negotiate one-sided assignment restrictions to provisions that more fairly balance their concerns with your business objectives.

The commercial lease is often the first or second largest expense line after salaries and wages and accordingly requires careful consideration. A Lawyer with experience in commercial leasing matters can review your lease and provide you with comments and advice enabling you to obtain a commercial leasing arrangement that meets your business’ needs.

EDITOR’S NOTE: This publication is the 41st installment of our firm’s Legal Matters series, which answers a reader’s question every week. If you have a general legal question that you would like to have addressed please send it via email to legalmatters@compellingcounsel.com