Jan 09, 2017

Top Deal Breakers for Tenants in Commercial Real Estate

By Don Catalano


Top Deal Breakers for Tenants in Commercial Real Estate.jpg

When you're searching for that perfect commercial space to lease and negotiating your contract, it's important to know what features, clauses and terms are must-haves; however, it's equally vital that you know when you should consider walking away from the table. The following are some deal breakers that should make you think more than twice about signing any lease:


Excessively Long Terms 

Landlords benefit from long lease terms. Having tenants committed for years at a time means not having to go through the hassles and expenses of filling vacant spaces. For you as a tenant, long terms don't have the same appeal. While you may find that your business needs remain unchanged over the years, it's more likely that what's best for your company tomorrow won't be the same as what's ideal today. 


Excessive or Unclear Fees 

Rent isn't the only thing you'll be expected to pay your landlord. Fees are a common part of real estate contracts, but it's vital that you examine them closely. Do some homework to find out what the going rate for a particular fee is in the market where you're looking, so that you know that you're not being overcharged. Also, you should hold the landlord accountable for clearly explaining what the fees are for, when they are assessed, how much they are and when they are due. If you can't pin him or her down and get clear language added to the contract, look elsewhere.


Forfeiture of Rights

In an ideal world, you'd be able to move into a commercial space in good faith, believing that your landlord would keep up their end of the terms outlined in the contract. Unfortunately, you can encounter everything from unscrupulous landlords to unforeseeable circumstances after you move in. If a disaster happens or your landlord turns out to be dishonest, you need to be able to take some type of action. That's why it's important to never sign a contract that says you waive your legal rights to take any type of action against your landlord.


Unwillingness to Put Things in Writing

Any promise that your landlord makes to you should be put in writing in the contract. Verbal agreements are not enforceable in a court of law, as they always come down to he-said, she-said sorts of arguments. If a landlord keeps saying that you can trust him or her and is reluctant to amend the contract to include a specific point that you've agreed upon, be ready to restart your search. In today's world of electronic documents, adding a new clause, inserting a sentence or rewording an aspect of a contract only takes a few minutes.


Unfavorable Renewal Terms

Never sign a real estate contract that does not give you the right to renew your property at the end of the lease, or one that requires you do so. You should have a chance to say whether or not you wish to remain in your space but not be obligated to remain in a place that no longer works for you.


Other Commercial Real Estate articles:

Ways to Avoid Leasing the Wrong Building

Checklist When Leasing Commercial Space

Office Space Questions You Should Ask - Part 1


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Don Catalano

Don Catalano