How different are commercial leases from residential leases?

On Behalf of | May 4, 2020 | Real Estate Law | 0 comments

When you start a new business, you need a location from which to operate it. If you are like most start-up entrepreneurs, however, you likely do not own commercial property. You, therefore, will need to lease your business location, at least initially. This, in turn, thrusts you into the often complicated world of commercial leases.

FindLaw explains that commercial leases differ substantially from residential leases. First, they provide neither you nor the lessor as many legal protections. Why? Because the law presumes that both of you are sophisticated business people who understand the provisions of leases. As to those provisions themselves, you have considerably more negotiating room then you do when leasing a residence.

Negotiable terms

You can negotiate virtually all terms of a commercial lease. The most common negotiable terms include the following:

  • Your lease period’s length
  • Your security deposit amount and the conditions under which your landlord will return it to you
  • Your monthly rent amount and if, when and how it will increase during your lease term
  • Your responsibility, if any, to pay for property improvements during your lease term
  • Your restrictions, if any, regarding business signage
  • Your ability to sublease the space and any applicable restrictions thereto

Lease structure

Given that most commercial leases contain numerous pages, try to make yours as straightforward and organized as possible. For instance, use plain English instead of legalese whenever possible. In addition, consider breaking your lease into numbered or lettered sections, one for each topic covered. Finally, make sure that both you and your landlord fully understand and agree upon your respective rights and obligations as set forth in the lease.