KEEP THE LANDLORD FROM BEING ARBITRARY

Propose that whenever you are required to get the landlord’s approval or consent, it will not be unreasonably delayed or withheld.  If you cannot get such a blanket provision, try to insert the requirement at each point in the lease where you want to avoid arbitrariness on the part of the landlord.

PROTECT YOUR VISIBILITY, ACCESS AND PARKING

Try to include a provision preventing the landlord from making changes that would materially interfere with the visibility of your premises or signage from nearby roadways, or with your customers’ convenient access and parking.

AVOID RELOCATION PROVISIONS

Try to avoid a provision which would allow the landlord to relocate you to another space if it wishes.  If it is unavoidable, ask for the right to comparable space with comparable access and visibility, the right to prevent the relocation if you reasonably believe the space is not comparable, and a promise that the landlord will pay every cost associated with the relocation including remodeling, moving, and publicizing the new location, and another promise that the relocation will occur during your slow season.

USE A TITLE REPORT TO YOUR ADVANTAGE

As part of your due diligence before entering into the lease it is often advisable to obtain a current title report or preliminary title insurance commitment on the premises and the building in which it is located.  Try to get the landlord to supply the report, but if that is not possible or the landlord’s most recent report is a bit stale then get your own.  Ask a local title insurance company for a “preliminary leasehold title insurance commitment.”  Most title companies are happy to provide the report, though if you do not plan to purchase the insurance ask about the cancellation fee.  It is usually small.  Besides assuring yourself that the landlord actually owns the property, you may discover an encumbrance which is inconsistent with your business.  For example, I once found a recorded restriction on outdoor retail sales when my client wanted to offer outside dining.  Even the landlord was surprised.  We made removal of the restriction a condition of the lease.

CLEARLY DESCRIBE THE SPACE YOU WANT TO RENT

Make sure the lease clearly describes the space you want to rent.  A drawing with dimensions is an excellent way to do this; make it an attachment to the lease.  This or another drawing should show the location of the space within the building that contains it, your exclusive or non exclusive parking area(s), where your large trash containers are to be kept, and any other areas of importance (e.g. storage areas).  A legal description of the premises or the building in which it is located is also important.  In addition, clarify which areas are included in your premises for your use and for rent calculation purposes, such as hallways, bathrooms, and mechanical areas, and which areas are “common areas” for use by all tenants.

LEASING COMMERCIAL SPACE AS A TENANT

Startup and expansion of businesses often require leasing space for new locations.  Because the lease represents a major financial commitment it deserves careful attention.  Most proposed leases are drafted by and favor the landlord.  The lease negotiation is the tenant’s time to understand and, to the extent possible, improve its provisions.

 

FIRST NEGOTIATE A DETAILED LETTER OF INTENT

 

Work with the landlord to develop a fairly detailed but non-binding letter of intent setting out all of the business terms that are particularly important to you, such as the lease term, options to extend the term, the location you would lease, the square footage of the space, the rent, parking available for you and your customers’ use, tenant improvements to be made and/or paid for by the landlord, preliminary approval of your signage and decor, and so on.  If you cannot agree at the letter of intent stage there is no point in getting into detailed lease negotiations.