The lease you sign is the absolute most important decision you will make for your business. It’s a fixed cost that once signed there is no turning back and will effect your practice for the next 5-10 years. Before you sign ANY lease let our team review it FREE of charge. We offer consultation with no obligation review of your lease to ensure that you are getting the best & safest deal possible. With over 10 years in the business we can provide you with expertise and experience in the details of your lease providing security in the future of your practice.
This service includes a comprehensive lease review and analysis of any commercial lease in the Canada. Applicable business and legal aspects of the lease are commented and modified directly to the lease document.
Commercial Lease Review:
After months of searching you finally found the perfect location for your business. The rent is reasonable, the size is just right, the landlord seems nice. You can already picture your business in this location. You ask to review the lease and the landlord says “Oh, it’s just a standard lease. Everyone signs it.” STOP! There is no such thing as a “standard” commercial lease. Review is always necessary! We can negotiate the various provisions to your benefit.
Here are just some of the provisions that are negotiable and not nearly standard.
1) Personal Guarantees
Most landlords will likely ask that the lease be personally guaranteed by someone. Typically this is the principal of the corporation but does not need to be. A personal guarantor would be responsible for rent and any other payments due on the lease if the tenant, typically the corporation, does not pay.
If the potential space is located in a shopping mall, or even if the same landlord owns several properties in a small area, you, as the tenant, may be able to negotiate a provision that would prohibit the landlord from leasing space to your competitor.
3) Common Area Maintenance Charges
Is there a parking lot that services multiple businesses or a building elevator used by all the tenants? There are likely to be monthly or quarterly charges for the maintenance of these areas. It is important to review the commercial lease to ensure that the charges are explicitly enumerated. These charges can be a percentage of actual costs or a fixed amount. No matter how the charges are calculated the lease should stipulate how responsibility is designated and how often charges can be increased.
4) Term, Renewal, and Options
The initial term for most commercial leases is typically two to five years. When negotiating the initial term it is important to focus on the amount of space the business will need as it grows. When conducting the commercial lease review it is important to focus on renewal and options.
5) Assignment and Subletting
Landlords like to restrict the tenant’s right to assign or sublease the premises. Be careful before you agree to such a provision. The way the provision is worded can restrict your ability to change the entity form or even take on a business partner.
6) Use Restrictions
It is important to know how the leased space will be used and ensure that use conforms with the space itself. The lease may specify restrictions on equipment that can be installed or limit the load per square foot. Before signing the lease ensure that your plans for the space will work within these restrictions. The lease may also restrict activities permitted in the space. Again, it is important that your business goals are inline with these use restrictions.
The commercial lease will have a requirement that you, as the tenant, maintain insurance. Review the type of insurance required and the amount. Make sure the amount is not excessive for your business.
8) Tenant’s Work
In most situations the tenant is responsible for the build out process. When conducting the commercial lease review, pay careful attention to how much control the landlord has over the process.
9) Notice of Default
The notice of default is essentially the landlord’s ability terminate the lease early based on a default by the tenant. This right can either be at landlord’s option upon the occurrence of a default or automatic upon that occurrence. If the right is automatic the landlord may begin holdover proceedings when there is a default.
10) Damage and Destruction of Premises
In the event of fire or other casualty the landlord will be responsible for certain repairs. The commercial lease will stipulate the time frame and extent of work. Ensure these are reasonable and will not unnecessarily delay your own repairs.
Need more help? Or a personalized review of your commercial lease? Contact us today.