Commercial Lease Agreements – Tenant Representation

If you are leasing space, your commercial lease may very well be one of your largest expenses, but if timed right and negotiated well, it can also be one of your biggest assets. Retaining an attorney to provide you legal advice concerning the terms and conditions of your lease will save you money in the long run. While your commercial real estate agent will usually offer up some general advice about what he has seen in the past (and there’s no denying that such information is valuable), it is not legal advice. The benefit of legal advice over the general advice that your agent might offer is that legal advice explains the potential consequences of the language chosen or used by the drafter, as well as how those consequences could affect your lease and business.

While the landlord’s agent often presents a lease in on an AIR Commercial Real Estate Association form and that form that looks non-negotiable with standard template lease provisions, it is important to know that every one of those provisions is negotiable. We are not suggesting that you need to independently negotiate the language of each and every one of those terms. As with most negotiations, you need to differentiate the most important issues from the secondary issues in order to focus your negotiating capital on the stuff that matters. Black and Deen will help you focus in on the issues that are important and counsel you on what position to take on those issues.

As an attorney that has represented both tenant and landlords, we can help explain why a landlord is insisting on particular language or why a Commercial Lease Agreement is structured in a certain way. Good tenant representation requires an understanding of the other side so that you can secure lease terms that are not overly onerous. The difference between an overly expensive lease and a fair lease, can mean the difference between a successful enterprise and an insolvent one. We are happy to work within your budget to devote the level of review and the amount of time that you need to explain certain lease terms, spot issues and assist or lead negotiating the terms and conditions.

Commercial Lease Agreements – Landlord Representation

As a landlord, there are a number of considerations in addition to simply getting the most rent possible in a certain market. Doing a little due diligence on the potential tenant is important to try to increase the odds of a successful landlord-tenant relationship. Keeping your commercial space occupied with tenants that consistently pay on time is critical. During the due diligence phase, negotiating a Letter of Intent with the prospective tenant is a good way to see how he or she will approach a contract negotiation and, of course, it sets the framework of the parties’ agreement which will be translated into the full Commercial Lease Agreement. As with nearly every other type of agreement, your Commercial Lease Agreement needs to be well-thought out so that disputes with your tenants can be avoided. Any ambiguities in the Commercial Lease Agreement leave the potential for a tenant to exploit the ambiguity and thereby causing you to expend resources to deal with the dispute. Minimizing the future capital expenditures that you are responsible for is important for the long-term success of the investment.

My approach to representing landlords is to be reasonable, yet firm with tenants during negotiations. It usually is not advantageous to be too heavy-handed in a lease negotiation or renegotiation. From a business perspective, we think it is smart to enjoy a good working relationship with your tenants. If you can help a tenant succeed without it impacting your bottom line, you will ultimately benefit. If the lease terms are too onerous, your tenant’s business might not succeed, which means it will default on the lease and you won’t be paid.

Commercial Property Purchases

At some point in your business life cycle, it may make sense to stop paying rent and buy a commercial space of your own. Owning your own property could be one of your best investments in your business. Once you have decided to take that next step, Black and Deen can assist you with negotiating the terms of the purchase agreement. The lion’s share of the time spent is spent on negotiating the indemnification and limitation of liability provisions, as well as the representations and warranties of the seller. It is important to make sure that you know as much about the property as the seller does. This will help prevent any surprises so that you can be sure to get the property in a condition that you expected. If the seller is financing the transaction, specific attention needs to be given to the payment terms, and the right of the seller to foreclose on the debt. Of course, it is natural for the seller financing the transaction to take reasonable measures to protect his security and to ensure that he/she is paid. However, there needs to be a fair balance with protections built in for you so that you have a reasonable opportunity to cure any defaults to protect your business.