6 Tips for Commercial Leases

The purpose of this article is to briefly point out six things to look for in a fair commercial lease:

1. Attorney Fee Clause: Should the lease result in litigation, attorney fees and court costs should be borne by the loser of the litigation.  This acts as a disincentive to frivolous claims and makes meritorious claims economically viable.
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2. Termination Notice: The landlord should not have the ability to terminate the lease without notice upon late payment of rent.  The landlord should be required to give the tenant written notice and at least 5 days to pay before terminating the lease.
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3. Use of the Property: Make sure that the tenant’s intended use of the property is explicitly permitted by the lease.
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4. Approval of Alterations: Many leases require approval of alterations and signage by the landlord.  The tenant’s proposed alterations and signage should be included as a rider to the lease to avoid disputes after the fact.
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5. Repairs: The landlord should be responsible for repairs to the external portion of the building and the building’s internal systems (like HVAC and plumbing).  The Tenant should be responsible for internal repairs.
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6. Indemnification:  Make sure that the indemnification clause benefits both parties.  The landlord should indemnify the tenant against lawsuits resulting from landlord’s negligence and responsibilities, and vice versa.