As a tenant taking on a commercial lease, you must safeguard your interest and that of your organization by ensuring that the terms of your lease agreement favor you in the short and long term. This blog post highlights the most important things we help our clients look out for in commercial lease agreements.
Name on the lease agreement
Like with every other contract, leases come with legal obligations that have consequences when infringed on. In a bad situation, you could be exposed to personal liability. This is, however, preventable. Commercial leases should not be signed in your name but in a separate one for your company. This ensures that you are not personally held liable for debts that may be a result of the lease. While not all landlords agree to this clause, it is crucial to bring it up. The most common reason for rejecting this is because of issues surrounding your financial history or lack thereof.
Before you agree to a personal guarantee as a stakeholder of the organization taking on the lease, remember the implications of liability for you. Doing this defeats the purpose of your taking the lease as a limited liability company. Instead of this, make assurances through cash or alternative deposits as required. This way, you can get a refund when your lease expires.
The duration of your lease agreement must be clearly stated. You may benefit better from short-term leases due to their flexibility. It may be the practical decision if your business is still growing. However, longer leases may help if you plan to invest time and resources in your facility. The decision on your lease term should be carefully thought through. We can advise you on this.
Repairs and Maintenance
The responsibility for repairs and maintenance should also be highlighted in your lease agreement. Watch out for lease terms about full repairs because this would mean you are responsible for every repair on the property, whether done in the interior or exterior. It is a tricky thing because the interior should usually be your responsibility, and the exterior, the landlord’s. Also, this condition may require you to leave the property better than you met it.
Except in specific circumstances, we advise our clients to adjust conditions for repair such that the obligation is to leave the property the same as it was given. You can back this claim by providing proof of the property’s state before and after the lease agreement.
While it is not expected, it is reasonable to have a clause that allows you the right to walk away should things go wrong. This clause will allow you only to be required to notify the landlord and give the decided notice period.
Successfully securing a commercial lease can be technical, and it is best to have solid legal counsel to help you bypass all possible problems that may arise. Our real estate attorneys can review your lease agreement to ensure that it favors you and your interests in the long term. Get in touch with us here