Wednesday, 2 May 2018

What to do Before You Enter a Commercial Lease

When entering a commercial lease as a tenant, there are numerous things you have to be aware of. You’ll have a host of rights and obligations throughout the course of your lease that you’ll need to be aware of, and plenty of potential remedies and liabilities, too. However, it’s important to remember the fundamentals – the things to take care of before even entering into your lease. Below, you’ll find a list of preliminary matters to attend to. Speak with a real estate lawyer in your area, as they may be able to provide other important steps you’ll want to take.

Consider Your Needs as a Tenant

Deciding where to locate your business is one of the most important decisions you’ll make. After all, you’ve surely heard about the importance of “location, location, location” when it comes to the success of any commercial enterprise. Therefore, take some time to seriously consider what your business needs out of a space. Ask yourself questions like: How much space do we need to operate? How many employees will I need to fit into the space? Where are my employees living or likely to live? How much parking will I need? Will my business be visible from the road? Do I expect to expand soon? These are just a few of the things that should be running through your mind before you even begin to look at properties. You should know exactly want you need, and then go looking for it.

Hire a Commercial Real Estate Broker

As with any real estate transaction, a broker who knows the local market can be a huge help. Not only are they able to fit your needs to local properties that are available, they’re also able to find you the best deals on the space you need based on their knowledge of comparable sales nearby. Of course, not just any broker will do. You want someone local, and who is familiar with your particular industry and its needs. Also, keep in mind that the landlord will likely hire their own broker, and this broker will place the landlord’s needs well above your own. Therefore, you will almost need your own broker just to keep things even.

Negotiate the Terms of a Letter of Intent

A letter of intent is the first thing you’ll negotiate over with your landlord. Although not quite the same as your full lease, a letter of intent will include all of the important lease terms, such as the property description, lease term, rental amount, and many more. While many or all of these terms may be renegotiated one or more times before a final lease is established executed, taking care with the letter of intent can save you time through early agreement [or showing you that agreement won’t be possible and the deal is a wash before it’s too late].

Keep in mind that, while not a binding commercial lease, signing the letter of intent does bind the parties to negotiate in good faith toward a lease. This means you have to put forth some kind of realistic effort toward reaching a final agreement.

Hire a Real Estate Lawyer

Last, but certainly not least, you should hire a real estate lawyer. An experienced attorney, like those at Adam Leitman Bailey, P.C., can help you with all of the above steps, as well as any of the other complex issues that are likely to arise in a commercial lease context. Do not think that you’re saving yourself any money by foregoing legal counsel and going through the process yourself. The liability to which you expose yourself is tremendous and will cost you far more in the long run.


Renting commercial space is a serious undertaking that should be handled with precision and care. Not only do you need to be attentive when it comes to negotiating the lease and maintaining your obligations during the lease term, you also need to do your due diligence before even beginning to look at properties or getting started on a lease. A lawyer can help with this, as can a real estate broker. It may sound like additional headaches on top of an already stressful process, but it’s worth it in the long run. 

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