Helping You Do Business Right

Understanding commercial leases

On Behalf of | Jun 28, 2019 | real estate law

At Gregory and Adams, P.C., in Connecticut, one of the things we do most often is help business owners solve the legal issues surrounding their real estate transactions. We, therefore, negotiate and draft many commercial leases and thought it might be a good idea to talk about the major differences between commercial and residential leases here on our blog.

FindLaw explains that when you find the location where you wish to conduct your business, the commercial lease you enter into should be tailored to meet your business needs. But keep in mind that the main differences between commercial leases and the residential ones you likely have had more experience with include the following:

  • Virtually all commercial leases last for a period of years.
  • Most of the lease terms can be negotiated between you and the property owner who will become your landlord.
  • Commercial leases do not have as many legal protections for either you or your landlord as residential leases because the law assumes that as business people, you and (s)he possess greater knowledge than residential lessees.

Common negotiable lease terms

While you have the opportunity to negotiate virtually all commercial lease provisions, the most common ones include the following:

  • The length of the lease
  • How much monthly rent you will pay and how much (usually represented by a percentage rather than a dollar amount) and when your rent will increase during the lease term
  • How much you will pay for your security deposit and the terms and conditions under which your landlord will return it to you at the end of your lease period
  • Which of you, landlord or tenant, will pay for property improvements during the term of your lease
  • What restrictions, if any, your landlord will place on you and your business with regard to signage, etc.
  • How and under what circumstances you can sublease your leased premises

As with all your business documents, you need to make sure you thoroughly understand and are comfortable with the provisions of your commercial lease prior to signing it.

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