Key Lease Clauses

All clauses in commercial and industrial leases are negotiable whether you have a gross or net lease. Understanding these clauses and how they affect your financial commitment to the space will help you protect your interests and negotiate the best possible terms.

If you are leasing commercial or industrial space, the landlord will typically prepare the lease and present it to you for approval and signature. Most landlords use a standard-form commercial lease, which includes a number of benchmark clauses in addition to stipulations specific to the building and unit.

The lease will outline:

• Your obligations as a tenant;
• Your rent and additional charges;
• Responsibilities for maintenance and repairs;
• Subleasing and assignment rights;
• Permitted and prohibited uses;
• The landlord's right to terminate the lease; and
• Your rights to terminate the lease.

Typically, the lease is prepared by the landlord's lawyer, and will often favor the landlord. Read the lease carefully, and question any hazy or ambiguous sections. You are entitled to request changes, deletions and additions before you sign.

Also, have a real estate attorney or your real estate agent assist in negotiating the terms of the lease from the very beginning, especially if you are entering into a long-term or expensive lease. Seek assistance in signing a net lease to ensure that agreements made between you and the landlord are clarified.

If you are unable to pay an attorney’s fee, some nonprofit organizations have reduced cost and/or free legal services. See Chapter 4: Professional Services for information.

The remainder of this section is devoted to discussing the key clauses to look for in a commercial or industrial lease.