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Commercial leases differ quite a bit from residential leases. If you are new to commercial property investing, it is a good idea to become familiar with common provisions found in commercial leases. According to REoptimizer, commercial lease provisions are a way to include some conditions on the agreement that may differ from the standard terms. There are several common provisions you should know about. Use clauses Use clauses can allow you to restrict how the renter uses the space. It can allow you to also place restrictions on the use of the property, such as hours of business. An exclusive use clause benefits the renter in that it ensures no other similar business will operate in the same building. Rent escalation clause A rent escalation clause allows you to increase the rent legally according to a schedule or based on triggers, such as an increase in property taxes. It provides you with the ability to avoid misunderstandings or have renters abandon their lease due to an increase. Renewal clause Commercial leases generally contain a renewal clause. Residential leases will often automatically renew unless the renter gives notice of moving out or you decide to end the lease, but commercial leases often require some type of confirmation and lease renewal at the end of the term. This clause will spell out the requirements to renew or end the lease. Improvement clauses Improvement clauses or alterations clauses cover what improvements are changes you or the tenant will make to the space. It outlines responsibility for costs as well. It may cover if the tenant must get permission before making changes.

Commercial leases differ quite a bit from residential leases. If you are new to commercial property investing, it is a good idea to become familiar with common provisions found in commercial leases. According to REoptimizer, commercial lease provisions are a way to include some conditions on the agreement that may differ from the standard terms. There are several common provisions you should know about. Use clauses Use clauses can allow you to restrict how the renter uses the space. It can allow you to also place restrictions on the use of the property, such as hours of business. An exclusive use clause benefits the renter in that it ensures no other similar business will operate in the same building. Rent escalation clause A rent escalation clause allows you to increase the rent legally according to a schedule or based on triggers, such as an increase in property taxes. It provides you with the ability to avoid misunderstandings or have renters abandon their lease due to an increase. Renewal clause Commercial leases generally contain a renewal clause. Residential leases will often automatically renew unless the renter gives notice of moving out or you decide to end the lease, but commercial leases often require some type of confirmation and lease renewal at the end of the term. This clause will spell out the requirements to renew or end the lease. Improvement clauses Improvement clauses or alterations clauses cover what improvements are changes you or the tenant will make to the space. It outlines responsibility for costs as well. It may cover if the tenant must get permission before making changes.

Not every California commercial tenant is a dream tenant, and in some cases, they are downright bad. If your commercial tenant has failed to make rent payments on time or at all or has otherwise broken lease terms, you may decide to move forward with an eviction. Tensions often run high during the eviction process. However, by staying calm and covering your bases, you may be able to make the situation easier while avoiding potential legal trouble. Per SFGate, there is a specific process you must follow when evicting a tenant from a commercial property. When doing so, be sure to take the following steps. Draft an eviction notice You must give your commercial tenant written notice of your plans to evict him or her. You must do so at least three days ahead of the day you plan to move forward with the eviction. Include the amount of rent overdue in the notice and make it clear that you must receive the amount in full within three days to stop the eviction. Serve the eviction notice Once you have your eviction notice drafted, you need to serve your commercial tenant at his or her place of business. If the tenant is absent, give the notice to a manager or executive who is present. If no one is there, post the notice to the door and be sure to put an additional copy in the mail. Following these guidelines may help you avoid unnecessary delays associated with evicting a commercial tenant and reduce any losses you might experience while eviction is ongoing.

Not every California commercial tenant is a dream tenant, and in some cases, they are downright bad. If your commercial tenant has failed to make rent payments on time or at all or has otherwise broken lease terms, you may decide to move forward with an eviction. Tensions often run high during the eviction process. However, by staying calm and covering your bases, you may be able to make the situation easier while avoiding potential legal trouble. Per SFGate, there is a specific process you must follow when evicting a tenant from a commercial property. When doing so, be sure to take the following steps. Draft an eviction notice You must give your commercial tenant written notice of your plans to evict him or her. You must do so at least three days ahead of the day you plan to move forward with the eviction. Include the amount of rent overdue in the notice and make it clear that you must receive the amount in full within three days to stop the eviction. Serve the eviction notice Once you have your eviction notice drafted, you need to serve your commercial tenant at his or her place of business. If the tenant is absent, give the notice to a manager or executive who is present. If no one is there, post the notice to the door and be sure to put an additional copy in the mail. Following these guidelines may help you avoid unnecessary delays associated with evicting a commercial tenant and reduce any losses you might experience while eviction is ongoing.

When making your first foray into commercial real estate in California, you may elect to construct a new property in order to be one of the first to enter into a lightly developed area. This requires, however, that you have a strong understanding of local zoning regulations. Many come to us here at Goodkin APC expecting to gain easy approval for their proposed property, only to later learn that their plans often come into conflict with the intended use of the land. To avoid this, you should familiarize yourself with the commercial opportunities local laws allow for. Different types of commercial zones According to the Los Angeles County Department of Regional Planning, there are several different types of commercial zones. Restricted commercial zones allow for most commercial services, while neighborhood commercial and general commercial zones extend those uses to include rental, tailor shops and outdoor advertising, and secondhand stores, respectively. Commercial highway zones permit professional office space, financial services and parks and playgrounds, while commercial manufacturing areas allow for just that. Commercial planned development allows for most other non-residential restricted commercial services, while commercial recreation zones alott land for various types of recreational services. Each respective type of zone specifies certain allowable features, such as: Parking Exterior displays Outdoor storage Building height Zoning variances and conditional use permits What happens if the area you wish to build a commercial property on is not zoned for your desired use? You can seek a zoning variance, which allows for a waiver of development standards. However, officials often do not grant variances for properties not otherwise allowed in a particular zone. An easier option may be to seek a conditional use permit, which allows for certain uses which may not precisely fit into a certain zone. You can find more information on commercial property regulations throughout our site.

When making your first foray into commercial real estate in California, you may elect to construct a new property in order to be one of the first to enter into a lightly developed area. This requires, however, that you have a strong understanding of local zoning regulations. Many come to us here at Goodkin APC expecting to gain easy approval for their proposed property, only to later learn that their plans often come into conflict with the intended use of the land. To avoid this, you should familiarize yourself with the commercial opportunities local laws allow for. Different types of commercial zones According to the Los Angeles County Department of Regional Planning, there are several different types of commercial zones. Restricted commercial zones allow for most commercial services, while neighborhood commercial and general commercial zones extend those uses to include rental, tailor shops and outdoor advertising, and secondhand stores, respectively. Commercial highway zones permit professional office space, financial services and parks and playgrounds, while commercial manufacturing areas allow for just that. Commercial planned development allows for most other non-residential restricted commercial services, while commercial recreation zones alott land for various types of recreational services. Each respective type of zone specifies certain allowable features, such as: Parking Exterior displays Outdoor storage Building height Zoning variances and conditional use permits What happens if the area you wish to build a commercial property on is not zoned for your desired use? You can seek a zoning variance, which allows for a waiver of development standards. However, officials often do not grant variances for properties not otherwise allowed in a particular zone. An easier option may be to seek a conditional use permit, which allows for certain uses which may not precisely fit into a certain zone. You can find more information on commercial property regulations throughout our site.

Leasing real estate to commercial tenants in California involves a certain degree of risk. As a commercial landlord, you may do everything in your power to minimize how long your space stays empty. A potential way to prevent a tenant from breaking a lease term involves including a sublease clause in your commercial lease. According to the California Department of Real Estate, a sublease clause allows a tenant to transfer its right to a portion of premises, or the entire premises, to another entity for part of the existing lease term. Understanding liability in subleases In some ways, a commercial sublease clause favors the lessee by giving that company an out if the lease no longer meets its need. However, in the event that a subtenant fails to keep up with the terms of the lease, the original tenant is on the hook for what the subtenant failed to pay. Subleasing to financially secure subtenants Many California commercial leases allow tenants to sublease their spaces to other entities. However, certain conditions must exist to do so. Before a tenant may sublease to another entity, it must be able to prove that the new subtenant has the financial stability needed to cover the expenses associated with the commercial property. As a commercial landlord, your own duties and responsibilities do not change much when you allow a tenant to sublease your space to someone else. If your lessee sublets some of your space to another entity and that company damages the space, for example, it becomes the duty of your original lessee to cover associated costs.

Leasing real estate to commercial tenants in California involves a certain degree of risk. As a commercial landlord, you may do everything in your power to minimize how long your space stays empty. A potential way to prevent a tenant from breaking a lease term involves including a sublease clause in your commercial lease. According to the California Department of Real Estate, a sublease clause allows a tenant to transfer its right to a portion of premises, or the entire premises, to another entity for part of the existing lease term. Understanding liability in subleases In some ways, a commercial sublease clause favors the lessee by giving that company an out if the lease no longer meets its need. However, in the event that a subtenant fails to keep up with the terms of the lease, the original tenant is on the hook for what the subtenant failed to pay. Subleasing to financially secure subtenants Many California commercial leases allow tenants to sublease their spaces to other entities. However, certain conditions must exist to do so. Before a tenant may sublease to another entity, it must be able to prove that the new subtenant has the financial stability needed to cover the expenses associated with the commercial property. As a commercial landlord, your own duties and responsibilities do not change much when you allow a tenant to sublease your space to someone else. If your lessee sublets some of your space to another entity and that company damages the space, for example, it becomes the duty of your original lessee to cover associated costs.

Leasing commercial property is a great way to grow your business. When entering into a commercial landlord/tenant agreement, your lease will be the blueprint between you and the property owner. A good lease will offer protection to both parties, while also providing guidance in the event disputes arise. However, not all commercial leases are in your best interest. Forbes lists some clauses and language to look out for if you want to protect your investment. In the very least, these clauses require clarification, or modification if you believe they will adversely affect you down the road. Provisions that favor only one party Leases are supposed to favor both parties equally. Provisions that offer benefits only to the landlord – or worse – can be construed as detrimental to you, are clearly not in your best interest. If one such provision exists in a lease, it is likely that the document was designed to favor the property owner and not the tenant. Vagueness surrounding obligations Both you and the property owner will have certain obligations when it comes to the commercial property. These obligations and responsibilities must be explicitly stated, otherwise disputes are bound to occur. When they are not, occurrences out of your control may become your responsibility. As a result, you may face legal action for a situation that the landlord should have been in control of. Typos and errors While mistakes are part of being human, leases are an important legal document. Accordingly, they must be reviewed and edited diligently to ensure they are accurate and free of mistakes. Numerous mistakes may indicate the landlord is also careless in other ways, which can directly impact you should the building require repairs or maintenance. Never let a questionable clause or provision slip by unnoticed in a commercial lease. It is best to have the document reviewed by an attorney to pinpoint any issues, so you can make the right decisions for your business.

Leasing commercial property is a great way to grow your business. When entering into a commercial landlord/tenant agreement, your lease will be the blueprint between you and the property owner. A good lease will offer protection to both parties, while also providing guidance in the event disputes arise. However, not all commercial leases are in your best interest. Forbes lists some clauses and language to look out for if you want to protect your investment. In the very least, these clauses require clarification, or modification if you believe they will adversely affect you down the road. Provisions that favor only one party Leases are supposed to favor both parties equally. Provisions that offer benefits only to the landlord – or worse – can be construed as detrimental to you, are clearly not in your best interest. If one such provision exists in a lease, it is likely that the document was designed to favor the property owner and not the tenant. Vagueness surrounding obligations Both you and the property owner will have certain obligations when it comes to the commercial property. These obligations and responsibilities must be explicitly stated, otherwise disputes are bound to occur. When they are not, occurrences out of your control may become your responsibility. As a result, you may face legal action for a situation that the landlord should have been in control of. Typos and errors While mistakes are part of being human, leases are an important legal document. Accordingly, they must be reviewed and edited diligently to ensure they are accurate and free of mistakes. Numerous mistakes may indicate the landlord is also careless in other ways, which can directly impact you should the building require repairs or maintenance. Never let a questionable clause or provision slip by unnoticed in a commercial lease. It is best to have the document reviewed by an attorney to pinpoint any issues, so you can make the right decisions for your business.

As someone who may not be familiar with commercial leases, you may encounter terms that confuse you. It is important to not only read over your commercial lease but to also lookup unfamiliar terms to understand the agreement you are about to enter. Gross Leases According to FindLaw, gross leases are a very specific type of commercial lease that lays out requirements for both you and your landlord. Like with flat or fixed leases, you must pay a predetermined amount for rent. In a gross lease, however, there may be a clause that allows the landlord to increase that rent once a year. Typically, the landlord is responsible for the operating costs of the unit. This may or may not include utilities such as heat, cooling and electricity. Net leases Net leases allow landlords to increase the rent when they occur an increase in their costs as opposed to waiting once a year. Per this type of commercial lease, you will usually pay a portion of the expenses in addition to the rent. Under some net leases, you may also be responsible for paying up to the full amount of real estate taxes. Step leases Step leases combine some elements of both gross and net leases. Rent increases occur once a year and are meant to offset the landlord’s increase in expenses. Whereas rental increases under a net lease are based on realized increases, step leases include raises based on estimated increases instead. Cost-of-living leases As the name suggests, cost-of-living leases increase rental costs based on the cost of living. As the cost of living increases, your rent will increase as well. Being sure to understand your lease requirements before you sign can help you avoid problems in the future.

As someone who may not be familiar with commercial leases, you may encounter terms that confuse you. It is important to not only read over your commercial lease but to also lookup unfamiliar terms to understand the agreement you are about to enter. Gross Leases According to FindLaw, gross leases are a very specific type of commercial lease that lays out requirements for both you and your landlord. Like with flat or fixed leases, you must pay a predetermined amount for rent. In a gross lease, however, there may be a clause that allows the landlord to increase that rent once a year. Typically, the landlord is responsible for the operating costs of the unit. This may or may not include utilities such as heat, cooling and electricity. Net leases Net leases allow landlords to increase the rent when they occur an increase in their costs as opposed to waiting once a year. Per this type of commercial lease, you will usually pay a portion of the expenses in addition to the rent. Under some net leases, you may also be responsible for paying up to the full amount of real estate taxes. Step leases Step leases combine some elements of both gross and net leases. Rent increases occur once a year and are meant to offset the landlord’s increase in expenses. Whereas rental increases under a net lease are based on realized increases, step leases include raises based on estimated increases instead. Cost-of-living leases As the name suggests, cost-of-living leases increase rental costs based on the cost of living. As the cost of living increases, your rent will increase as well. Being sure to understand your lease requirements before you sign can help you avoid problems in the future.