So you are starting your business and you decide you need a place to sell your products. You look for the perfect location and find a great rental opportunity, but is it? This opportunity is a commercial opportunity and means you would be signing a commercial lease and there are big differences between a commercial lease and a residential lease.

Small businesses need to be cautious when entering into a lease for their commercial space. It is recommended to have a lawyer review the commercial lease before you sign. One main reason for this is that there is very little in the way of protections for the tenant with commercial leases. People often believe that the government has protections for tenants of commercial leases the same way they do for tenants in residential leases. However, the government does not protect or regulate these leases because they assume the parties entering into them are sophisticated business actors and can take the steps necessary to protect themselves.  Therefore it is important to read these documents very carefully to understand what you are agreeing to.

In commercial leases there are a lot more terms than just how much the rent will be. There are questions like what common elements are included and to what extent you can use them, what the responsibility is between landlord and tenant, and in particular, who is responsible for what maintenance in the building. But beyond that, it is not uncommon that a commercial lease might also include personal guarantees from the individual tenants, particularly when the business is brand new, and protection from liability for the landlord. It may be that the landlord should be protected but the landlord will have prepared this lease and may have extended their protections to a point that you could be liable in a situation you would not otherwise have been. Furthermore, with personal guarantees, your home and other things you own could be at risk if you are liable.

It is important to keep in mind as well that a commercial lease is usually negotiable and that the landlord will not always have your best interests at heart. Spending money on a lawyer for lease review might seem like a lot of cost up front but it could save you far more in rent or other penalties later on. Contact us before you sign and allow us to review the lease so we can do our best to protect you and your business.

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