Leasing Commercial Property? Don’t Forget These Issues

So you bought or you own commercial property. All you have to do now is find a tenant (or a few of them), get a lease, and collect the rent, right? Well, it’s  a bit more complex than that, and if you don’t account for every contingency, you could end up with legal problems down the line.

Who is Your Tenant?

It can be tempting to just sign a lease with the first tenant who wants to lease the property. But remember that most commercial leases are long term leases, where both parties are investing a lot of money. You should treat your possible tenants, as if they were future business partners, and that means conducting due diligence on who it is you’re renting to.

Getting references, doing credit checks, and asking for financial statements can go a long way to making sure that you have viable tenants that will be able to pay rent and other expenses under the lease. If the tenant is in a highly regulated industry, such as one where licenses or permits are needed to operate, you’ll want to make sure that the tenant has these things.

If you get the sense that a tenant may be biting off more than they can chew financially, you may save money by passing.

Remember that if you do any background checks, including credit or criminal background checks, you’ll want to make sure that you have all the signed permissions and authorizations allowing you to do so.

Zoning Laws

Don’t assume that the tenant’s business is one that local ordinance allows to operate out of your property. Many zoning laws may prohibit certain kinds of businesses, or may prohibit heavy traffic, noise, toxic chemicals, medical facilities, or other issues that certain businesses may present.

Initial Construction

Buildout inside the rented unit is often required in commercial leases, and that makes them as much construction contract agreements, as they are commercial leases. Issues that arise in construction contracts, like delays, change orders, or lack of or unavailable construction supplies, are all things that can arise unexpectedly. Your lease should address what happens if there are problems with any of these issues.

Who Pays for What?

Once the tenant is in, most commercial leases require that the tenant pay for any regular maintenance, and some even make the tenant pay for certain repairs to the property.

You can structure it however you like–but you should be clear what qualifies as maintenance, and what qualifies as repairs. And–speaking of the initial buildout that we discussed above–you’ll also want to address who is responsible for repairs for problems that are caused by that initial buildout.

Are We Exclusive?

Many tenants will want exclusivity–that is, they won’t want you to lease any other part of your property to any businesses that could be considered competitive. From your perspective, that can be limiting–you want your property leased out to whoever wants to lease it.

However you decide, it should be spelled out and clarified in the terms of the lease.

Commercial lease or construction contract? Call our Fort Lauderdale business and construction law attorneys at Sweeney Law P.A. at 954-440-3993 for legal help.

Source:

aaacredit.net/commercial-tenant