The 5 Key Commercial Lease Terms for Restaurants:
Get “On the Same Page” As Your Landlord, Figuratively and Literally
Finding and leasing commercial space has a different set of rules than for residential rental properties. One golden rule, however, remains true in both cases: thou know and understand the key lease terms and ensure the lease agreement is specific and clear.
This is the six and final part of a six-part series, examining five key terms in your commercial lease agreement. Today’s post, honestly, is a bit of a cop-out, as we’ll discuss some general considerations not previously discussed, rather than one particular term.
Special Needs. It’s amazing how many tenants have a particular need or desire in their leased premises, such as particular parking needs or unfettered access to a courtyard, and then fail to include those items in the lease agreement. If there is a particular, unique reason why you chose your soon-to-be property, include it in the lease agreement to ensure it isn’t taken away.
Other, Minor Considerations. While maybe not a deal-breaker, there are always other items to consider, such as signage or other visibility to prospective customers, preexisting ADA-compliant bathrooms, advertising or marketing restrictions, and restrictions on a particular use. Do your best to think of all the considerations that made you settle on the particular premises and ensure those considerations are included in the lease agreement. Otherwise, in the future, you may lose access to the considerations that drew you to the space initially.
Lease Drafting. Commercial lease agreements tend to favor the landlord. The reason is simple: commercial brokers and landlords tend to get their lease templates from attorneys, who represent commercial owners and draft contracts that favor their clients, and commercial property professional associations, who, in turn, retain attorneys to do the same thing. (If the template comes from one of these associations or a one of their books, oftentimes it will have a title in the header or footer of the document indicating the same.) While the agreements aren’t illegal or ethical, they will, when possible, tend to favor the landlord. It’s not uncommon, for example, for lease agreement to permit a landlord to cancel the lease for a particular noncompliance by the tenant, but not permit the tenant to cancel the lease for a similar noncompliance by the landlord. (When reviewing contracts, often times what’s good for the goose isn’t also good for the gander.) So, a savvy tenant will read the lease agreement and identify those areas where the landlord is being favored over the tenant and renegotiate the terms to be equal and fair. Don’t be afraid to submit your own drafting or propose additional clauses on a separate sheet or paper, even if the landlord’s proposed lease is clearly a template. And, you may consider hiring an attorney to review and analyze the lease agreement. This may not be as expensive as you think. I, for example, do lease agreement reviews for a flat fee.
If you only take one thing away from this blog series its this: make sure your agreement/ understanding with your landlord is clearly and accurately reflected in your lease agreement, or you may find yourself arguing over the definition of “a coffee shop.”
I hope this series has helped you in your commercial lease needs. Thanks for all you do in creating culture for the rest of us to enjoy.