The Importance of Understanding a Commercial Lease

A commercial lease is a contract between the owner of the commercial property and a business tenant for a property intended to be used for business purposes.  California law offers less protection for commercial tenants as compared to residential tenants.  Commercial landlords can often be exposed to more liability than a residential landlord due to the increased possibility of personal injury or property damage occurring at the business location.  As such, every provision of a commercial lease can have a significant impact on the rights of both the tenant and landlord, as well as the patrons of the business.

Commercial leases involve much more than the amount of rent paid by the tenant.  For example, the terms of the lease will determine how long the lease is valid, which can often be for several years.  The parties may want to include an option to extend the lease beyond the original term.  Additionally, commercial leases should clearly outline the tenant’s rights and restrictions about alternations and improvements to the property.  It should also identify which party is responsible for paying for such alternations.  Given the value of commercial property, it is critical that the lease outline which insurance policies are required as part of the lease, and which party is responsible for paying for each policy.  A commercial lease should also outline each party’s right to terminate the lease, and under what circumstances.

Realtors frequently use standardized forms for commercial leases, such as a C.A.R. forms.  However, the parties (landlord and potential tenant) can, and often, negotiate terms that are unique to their company and their intended use of the property which may not be included in a standardized form. This is why it is critical to understand and negotiate each provision of a commercial lease to tailor it to your specific needs, before entering into a commercial lease for your business.  It is critical to understand what you are responsible as a tenant, or what you want your tenant to pay for as a landlord.  Chauvel & Glatt attorneys can assist you, whether a landlord or tenant, in reviewing and drafting commercial leases, advising, counseling landlords or tenants on what the terms of a commercial lease means if drafted by your broker, the implications financial and otherwise about your commercial lease and resolve disputes surrounding your commercial lease. For legal assistance with your commercial lease, contact the real estate attorneys are Chauvel & Glatt.

The material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes. For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500. (photo credit: depositphotos.com).

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