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Negotiating a Commercial Lease

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Negotiating a Commercial Lease

A commercial lease is necessary when you are renting out a place to do business. The lease dictates the terms between the landlord and the commercial tenant, including the duration of the lease and the responsibility for building maintenance.

General Rules for Commercial Lease Negotiation

The general rule of a lease is that the landlord initiates it. With that said, the lease tends to be in favor of the landlord. Regardless, the tenant has the authority to negotiate very favorable terms.

How Should I Prepare For Negotiations?

Before you enter into negotiation, you must know what you want and what leeway you are willing to give. Essentially, you will need a negotiation strategy.

To develop the strategy, you must determine all the available vacancies in your area to gauge how much negotiations room you have. Additionally, you should consider whether you want to sign a letter of intent, which is a statement stating that both landlord and tenant are in serious negotiations and want the lease to go through.

What Terms Should the Tenant Negotiate?

Keep in mind; all terms of the lease are negotiable. However, depending on the market, you may be limited in your negotiation powers.

Nevertheless, key terms of the commercial lease should include:

  • Duration of the lease
  • Rent and rent increase per period of time
  • Option to renew the lease
  • Early termination of the lease
  • Tenant improvements
  • Subleases and assignments

Do I Need a Lawyer?

Commercial leases contain lots of complex terms, which make them difficult to understand. To successfully negotiate the terms of the lease, you should speak with an experienced real estate lawyer.

Photo of page author Mabel Yee

, LegalMatch Legal Writer

Last Modified: 06-20-2018 12:46 AM PDT

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