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| Business Development - Mentoring |
 COMMERCIAL
LEASES - TENANT'SCONCERNS - Part 3 By Dave & Cori Singleton - Legal Ease Library Inc. As discussed in the March/April issue of RW, if you rent space for your business, your commercial lease will be one of the most significant contracts you enter into. It will be a very complicated document which is heavily weighted in favor of the landlord. Therefore, it is strongly recommended that you have the lease reviewed by a lawyer who is familiar with commercial leases before signing anything (including an offer). This articles continues our discussion of some of the more common issues that tenants should consider and discuss with their lawyers and landlords before entering into a lease. Exclusivity - it is usually desirable to have the right to be the only tenant in the building/mall offering the product/services you offer. If your lease does not have an exclusivity clause, you cannot force the landlord to prohibit other tenants from offering similar products/services for sale. Even if another tenant’s lease prohibits them from selling such products/services, you cannot make the landlord enforce the other tenant’s lease. Parking - having convenient parking may be critical to the success of your business. If so, you will want the right to have designated parking spaces for yourself and your customers and employees. Signage - a landlord will often restrict the type of signage you may have, what it says and where you can put it. The cost of obtaining signage is yours. You may also have to pay a sign rental fee for the space your sign takes up. Fixturing Period - are you going to be doing any construction or improvements to the premises? How long will it take to get the premises ready for operation? Are you allowed to obtain possession of the premises before the term of the lease begins, and do you get any free rent period? Leasehold Improvements - if you are going to be making any improvements to the premises, who is responsible for doing the work - you or the landlord? If it is up to you, are you restricted in who can be contracted to do the work? Will the landlord be advancing any money to pay for the improvements, and if so, how much of a rent increase will this represent? What happens if there is a delay in the construction which results in you not being able to start operating on time? What happens if the renovations are completed early? Be sure that these issues are clarified in writing. Assignment or Subletting - if you want to assign or sublet your interest in the lease to another party, then you will typically need the landlord’s written consent to do so. Some landlords charge you to grant an assignment, or they impose a number of conditions on who you can transfer your interest to. If you have the right to assign the lease to someone else, the landlord will often not release you from your obligations under the lease. For example, if the new tenant fails to pay the rent, the landlord can still look to you for payment unless the landlord agrees to release you. Relocation - if you are located in a mall/ building with multiple tenants, you may feel there are better locations within the structure. Therefore, you may want to obtain the option to relocate to a more preferred space under the same terms of the lease. As well, you should be mindful of the Landlord’s right to relocate you. Many leases reserve the right for the landlord to move a tenant’s premises to a different part of the building. Try to have such relocation rights excluded from the lease. If the landlord insists on such rights, limit the circumstances in which this can be done, and include a clause that requires the landlord to pay for all of your costs associated with any relocation. Representations & Warranties - when leasing space, you often rely on the representations and promises that are made to you by the landlord regarding the condition of the premises, the traffic flow, the amount of the rent and occupancy charges plus whether you are allowed to have certain things such as designated parking or exclusive rights, etc. These representations and promises must appear in the written lease if you want to be able to enforce them. All Terms of the Offer Should Be in the Lease - if you sign an offer before entering into a lease, make sure all of the terms of the offer appear in the lease, as it will become the governing agreement and the offer will be null and void once the lease has been signed. If any terms in the offer do not appear in the lease, then they do not exist anymore once the lease is signed. Supplied by Dave & Cori Singleton, co-founders of The Legal Ease Library Inc. Call 403.215.8040 for information on where to buy your copy of the Legal EaseTM guide, ‘Understanding & Negotiating Your Commercial Lease.’ |