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Negotiating fair lease terms as a risk management strategy

| Sep 12, 2018 | Firm News

California business owners understand that unexpected complications can lead to both legal issues and financial losses. In some cases, the impact can be significant, and business owners see the importance of effective risk management and reducing the chance of problems. One practical way to avoid certain types of problems is to strategically negotiate the terms of any commercial lease.

Contract negotiation is a crucial aspect of protecting the best interests of your company, and you can do this with the terms of a lease as well. While landlords are not always willing to negotiate the terms of a lease contract, businesses find it prudent to ensure they take effective measures in order to ensure they do not face unnecessary exposure to various risks. The terms of your commercial lease could impact your company for years to come.

Reducing the chance of complications or financial harm

Commercial leases are different from residential leases in various ways. For example, the terms of most residential leases are generally not negotiable. Issues to consider include the following:

  • Commercial leases can cover an extensive amount of time, sometimes up to years at a time.
  • There are fewer legal protections available through a commercial lease, which means it is critical to negotiate fair and reasonable terms.
  • Each commercial tenant is different, and varied terms are common – it could be important to secure terms that are beneficial for your specific needs

Examples of terms you may be able to negotiate before signing a commercial lease include future rent increases, financial responsibilities of each party and penalties for early termination of the lease. Fair commercial leases are important for all types of business, including those seeking industrial space, offices, retail storefronts and mixed-use buildings.

The financial future of your business 

The decisions you make today will have a future impact on the health and success of your company. A bad lease could derail your business and keep you from your long-term goals. Risk management involves many things, but it can be as simple as ensuring you are agreeing to terms that are fair, practical and sustainable for the next few years of your company’s life.

Due to the significant financial risk involved with signing a commercial lease, it may be beneficial to have experienced guidance as you take this step. Before signing a contract, it can be helpful to have it carefully reviewed and evaluated by a knowledgeable legal professional.