Landlords: 3 things to consider when drafting commercial leases

On Behalf of | Jun 24, 2021 | Uncategorized |

If you are about to rent out one of your commercial properties for the first time, it is essential to understand how to create a contract that will serve you well.

Leasing a property can provide a good source of income. Yet, if you fail to have the correct contract in place, it could end up costing you more than you make.

A well-written commercial lease protects your interests

Here are some things you should think about when drawing up your commercial lease agreement:

  1. Restrict what the tenant can do with your property: A use clause lets you stipulate what the client can and cannot do with your premises. For example, it can help ensure they do not lower the tone of the neighborhood by introducing a cheap fast food joint or erecting flashy neon signs. You can also use this to protect your buildings. For instance, you might choose to ban all food sales to prevent the walls from becoming ingrained with grease.
  2. Clarify your right to increase rent: An escalation clause stipulates when you can raise the rent and by how much. It allows you to ensure you reap the benefits when rental prices in the area rise.
  3. Protect yourself from price increases or damage: There are several ways to price a commercial lease. You may choose to give one all-inclusive price, but this could disadvantage you if things like taxes or service bills rise. It can also lead to a client who wastes electricity or water because they are not paying or one who abuses your property because they are not responsible for repairs.

It can be difficult to ensure your commercial lease agreement protects your interests and anticipates potential problems. Experienced legal guidance can be invaluable moving forward.

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