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Commercial leases can be more complex than residential ones

| Nov 18, 2016 | Commercial Leases

A commercial lease serves as a contract between a business and a landlord for the rental of real property. Many businesses decide to rent property rather than buying it since this does not require as much capital. In Los Angeles and elsewhere, commercial leases are more complex than their residential counterparts. As with residential properties, though, the terms can be negotiated and vary from one lease to the next.

One important aspect of a commercial lease is that this type of lease offers fewer legal protections compared to a residential one. Commercial leases also have varied terms since every tenant has different needs. The length of the lease is typically longer than that of a residential lease as well, and it is also typically negotiable.

Important terms of a commercial lease to scrutinize include the rental amount and any rent increases provided for in the contract. It may be necessary to negotiate with a landlord to institute a cap on the increase, which is typically based on an annual percentage rate. Other important terms to review to ensure that they meet one’s business needs include the lease’s length, the security deposit amount and the use clause (meaning the permissible uses for the property). Contracts may also address whether a tenant is allowed to engage in subletting or assigning the lease to a different tenant.

Before signing a commercial lease, understanding the terms defining each party’s responsibilities and rights is essential. An applied understanding of the law may help individuals to effectively review commercial leases to ensure that their best interests are protected. Proper legal guidance can also help individuals in Los Angeles to navigate the intricacies of drafting leases.

Source: Findlaw, “Commercial Lease Agreement Overview“, Accessed on Nov. 15, 2016