Leasing commercial space is an excellent opportunity for many new and growing businesses. They can obtain space in which to operate without dealing with the challenges of financing a real estate purchase. They also have the flexibility to move into a bigger space eventually if the company succeeds.
Renting out commercial spaces can be a very lucrative endeavor for those who own industrial commercial spaces. However, landlords must weather quite a bit at risk in any rental scenario. The three contract inclusions outlined below can provide crucial protection for landlords that need to draft leases for business tenants.
Clear maintenance obligations
While residential landlords typically assume all maintenance responsibilities, that isn’t the case for commercial landlords. They can pass certain obligations to their tenants. They can also charge for any maintenance services that they provide. Outlining clear terms about what maintenance the landlord performs versus what the tenant must do and what, if any, costs there are for such services is crucial for a landlord’s protection in a commercial lease.
Restrictions on the use of the space
Landlords may want to assume the best about prospective tenants, but they could have ulterior motives. They may intend to commit crimes using the business as a cover or may eventually move into a higher-risk industry that could damage the facilities. They may have unsustainable levels of visitor traffic after negotiating to pay a small fraction of the costs for shared parking lot maintenance. Landlords often need to include clauses in their leases limiting the conduct of business tenants. Doing so allows the landlord recourse if they discover unexpected business operations or witness inappropriately heavy traffic into and out of a small commercial space.
Rules for ending the lease
Commercial leases typically last for years. Many businesses fail before they complete a long-term business lease. Landlords may want to include clear rules about assigning the lease to others or even force majeure clauses discussing when they can cease providing services or the tenant can terminate the lease early. Proper rules clarifying the duration of the lease and when either party can end it early can help landlords avoid scenarios in which tenants vacate the premises early and force them to invest in marketing to locate new tenants.
Negotiating customized commercial lease documents for each new tenant is typically advantageous for commercial landlords. Property owners who understand the risks of renting commercial space are in a strong position to protect themselves with a real estate attorney.