Commercial leases are lengthy and complex documents. Whenever you choose to enter into a commercial lease, whether it’s for office or retail space, it is always wise to have your attorney look the lease over for potential pitfalls before you sign on the dotted line. Here are four items to take into consideration when looking over a lease:
The landlord asks for a personal guaranty: Landlords like to try to require that you, as the owner of the business, will offer a personal guarantee that the rent will be paid on time and that you will fulfill all terms of the lease. Since it’s always smart to limit your personal liability where your business is concerned, it’s worth seeing what the landlord will accept as an alternative, for example a security deposit. If you are forced to offer a personal guarantee, your attorney can help ensure that the lease is worded to afford you the greatest possible protection.
Breach and default consequences: Businesses are unpredictable entities, and you want to ensure your property is protected if something goes wrong. In Florida, a landlord only has to give you three days notice to pay or vacate the premises if you’re late on rent for any reason. Building a grace period into the terms of the lease can help give you some extra time to put things right if needed.
Restrictions on assigning the lease: If all goes well, you may find yourself able to assign your lease. If your business is acquired, for example, the business that acquired you would (assumedly) take on the responsibility of fulfilling the terms of the lease. Landlords, however, usually need to give written permission for a lease to be assigned. If your landlord refuses to let you assign the lease, you’re still responsible even though your company is no longer under your control. It’s common to include a phrase in the lease that a landlord cannot “unreasonably withhold” permission to assign a lease.
Terms of relocation: This is a biggy, especially for retail stores. Landlords in Florida are currently allowed to relocate stores at their whim.
Whether you are entering a new lease agreement or facing a landlord-tenant dispute, it may be a good idea to talk to a skilled attorney. An experienced commercial law attorney can advise you on your rights and make sure all stakeholders understand the terms of the agreement entered into.