5 Easy Ways to Protect Yourself in a Commercial Lease 

by Karen Urman

The pandemic has created an influx of people looking into residential and commercial real estate investment. 

Here are some useful tidbits as you look for a commercial lease:

Know your clauses. In most instances, a force majeure clause in a commercial lease allows for either a temporary delay or a complete excuse of certain landlord obligations and/or tenant obligations under the commercial lease due to an event beyond the control of the landlord and/or the tenant. Having this clause in your lease allows tenants to hold rent payments without being penalized or evicted. 

Remember the occupancy clause. If the occupancy of the center goes below a certain percentage (that you negotiate), you may reduce your rent or you may have the ability to vacate with no penalty.

Choose a guarantee. Personal guarantors are always an extra layer of protection for the landlord, especially with a new business. 

Learn about your CAM. Request the most recent year of CAM (common area maintenance), as the charges will be your base for the future. Don’t forget to negotiate; you can always apply a CAP to how much the CAM can be increased in the years to follow.

Discover your HVAC. Make sure it is clear who is responsible for equipment maintenance and what happens if it needs to be replaced, such as whose cost it would be. Prior to signing the lease, request a report of the unit’s condition, as it is common for tenants to put a CAP on how much per year they are willing to contribute to the maintenance/repairs of the HVAC unit. 

URMAN is a property management, development and real-estate brokerage. We are a family-owned and -operated business of four generations and have been in the Valley for more than 30 years. It is fair to say we have seen many ups and downs and COVID was one of them. However, our experience has taught us that communication is key for success. Not just success for us; success for our clients, tenants and landlords (commercial and residential).

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