Service Overview
Focused legal support for commercial lease negotiation
A commercial lease sets out the terms on which a business occupies a retail storefront, office, industrial warehouse, or other commercial space. The wording of the agreement has a significant effect on the parties’ rights and obligations, including costs that extend beyond the stated rent.
Commercial lease negotiation involves reviewing the proposed agreement, identifying concerns, and negotiating changes that better reflect the business arrangement. Careful review can help address operational restrictions, unexpected expenses, and personal exposure under a guarantee.
The commercial lease process
The steps will depend on the property and the transaction, but may include:
- Offer to lease or letter of intent: The parties negotiate the main business terms, including base rent, lease length, renewal options, and the size of the premises. Reviewing this document before signing helps clarify which commitments are being made at the outset.
- Preparing the lease: A detailed commercial lease is prepared, often using the landlord’s standard form. Its terms should be checked against the initial agreement and the tenant’s intended use of the space.
- Legal review and proposed revisions: We review the draft for additional costs, maintenance obligations, restrictions, and other concerns, then prepare proposed changes.
- Negotiation: The parties work through outstanding issues such as operating costs, repairs, guarantees, and the ability to assign the lease when selling the business.
- Signing and possession: Once the terms are agreed, the parties sign the lease and any related guarantees or indemnities, with possession arranged under the agreed terms.
How we can help
Our office assists with:
- Offers to lease: Reviewing the initial business terms and negotiating appropriate conditions before the client commits.
- Occupancy costs: Examining taxes, maintenance, and insurance charges, commonly called TMI, as well as common area maintenance charges, capital expenditures, and administrative fees.
- Business protections: Negotiating renewal rights, exclusivity provisions, and assignment terms that support the client’s plans for operating, expanding, or selling the business.
- Personal guarantees: Explaining the proposed exposure and seeking appropriate limits on the amount or duration of a guarantee where these can be negotiated.
Who may need commercial lease assistance
- Business owners and entrepreneurs leasing a new retail, restaurant, medical, office, or industrial space, or renewing an existing lease.
- Franchisees who need the lease terms to align with their franchise agreement and operating requirements.
- Commercial landlords who need a lease drafted or reviewed to address the property, the tenant’s use, and the allocation of responsibilities.