Negotiating Your Strong NYC Commercial Lease

What clauses should I avoid agreeing to in a commercial lease?

Your commercial lease will be a central component to your successful business.  Signing a commercial lease is a big commitment, and one that should only be entered into with the assistance of a commercial real estate attorney.  Most commercial leases provided to you by the landlord will be in favor of the landlord. As such, you will want to carefully review the lease and request modifications to some terms so as to protect yourself and your new business.

Commercial Lease Terms to Avoid

When you review your potential commercial lease, you will want to closely examine the following terms:

  1. Long lease terms: Most new businesses will want to avoid signing a multi-year lease as it could leave them on the hook for paying several years of rent if the business fails.  Further, a long term lease limits your ability to expand the business or move to a new location if needed.  Work with your commercial real estate attorney to negotiate for the right length of lease, with renewal options, for you.
  2. The personal guarantee: Many landlords will ask you to sign a personal guarantee of the lease. By signing a personal guarantee, you will remain personally liable for any unpaid rent or damages to the building.  You should attempt to negotiate elimination of the personal guarantee.  If this cannot be achieved, seek a personal guarantee that lasts for only the first year or two of the lease.
  3. Immediate default: Review the termination clause carefully.  You want a lease that allows you some time to cure a default before you are evicted.  Avoid signing a lease that allows the landlord to immediately terminate the lease if rent is a certain number of days past due.

Favorable Commercial Lease Terms

There are some lease terms that you may wish to seek for the benefit of your new business.  These include:

  1. Tenant improvement dollars: If you intend to invest a considerable amount of money into the building, you may be able to negotiate for tenant improvement money from the landlord.  This sum will be given to you, or deducted from rent, to allow you to put more money into improving the building.
  2. Exclusivity clause: You may want to include a clause in your lease that prevents the landlord from renting space to another like business.  This is particularly important if you are renting in a newly developed shopping plaza.
  3. Sublease: You may wish to include a clause that gives you the ability to sublease the property should the need arise.  This can protect you should the business move or close suddenly.

Contact a real estate lease negotiation attorney for more assistance with negotiating your ideal commercial lease today.

Posted in: Lease Negotiation