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Commercial leases: more complex than their residential counterparts

Lessors and tenants involved in residential lease transactions sometimes benefit from obtaining the candid and on-point counsel of proven business attorneys experienced in real estate matters.

There is no question that such is the case when a commercial lease is being negotiated.

The similarities between a residential and commercial lease are few and narrow. The latter are generally far more nuanced and complex. An in-depth online overview of commercial leases stresses that they “are more complicated than residential leases because the terms are negotiable and vary greatly from lease to lease.”

The bottom line with a commercial lease is that a transacting principal will be well served by securing a qualified business legal team to offer relevant insight and input. There are fewer legal protections readily available to business parties negotiating a commercial lease than is the case with a residential lease. The above-cited article notes that “lawmakers assume business people are more knowledgeable” and can simply fend for themselves in their lease discussions and execution.

There is much to consider for a commercial landlord and prospective tenant. Negotiations often focus on matters like these:

  • Rent amount (with considerations relevant to calculation method, increases, security deposit and lease duration)
  • Improvements/modifications (who makes and pays for them?)
  • Exclusivity (will a tenant be protected against rivals seeking to rent nearby space?)
  • Lease assignment and subletting (permitted and, if so, on what terms?)

Those are just a few representative points that loom large in commercial lease negotiations. Every lease is different and subject to both regulatory changes and the realities that are present in the local business market.

Questions concerning commercial leases can be directed to attorneys at an established commercial law firm.

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