A commercial lease often represents the most significant legal obligation and expense for a start-up business.  Business owners should not take the lease review and negotiation process for granted.  For even the simplest lease agreement covering a few hundred square feet of retail or office space, be sure to review each and every provision of the lease to understand the extent to which it impacts your business.

Important clauses in a commercial lease that small business tenants should carefully review include the following:

1.  The Use Clause—Is this provision broad and flexible enough to allow you to do not only what you are doing now, but what you reasonably expect to be doing in the future?  Is the landlord allowed to rent space in the same shopping center or building to a competing business?

2.  Maintenance—Landlords would prefer to allocate all maintenance and repair costs to their tenants and, for the most part, they are successful in doing so, particularly when negotiating with small tenants.  However, tenants can and should ensure that the repair and maintenance provisions are not overreaching.  Tenants should insist, at the very least, that the landlord be responsible for maintaining the structure of the building, common areas, plumbing, electrical, and HVAC.

3.  Signage—A small retail business needs maximum visibility so its loyal customers can easily find them and also in order to attract random foot traffic.  However, a landlord has various legal and strategic reasons for restricting the size, design, and location of signs and banners identifying the tenant’s business.  If signage is a significant issue for the tenant (perhaps due to obligations under a franchise agreement), then the tenant should address this issue as early in the process as possible, preferably during initial discussions or the letter of intent stage.

These are just a few of a dozen or more critical legal and business terms addressed in a commercial lease.  For a fixed fee, Perkins Law will review and analyze a lease agreement, discuss your business structure and objectives, propose suggested changes to better protect your interests, and serve as a resource to answer your questions until the lease is signed.