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Components of a Commercial Lease

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All small business owners face a significant task when first negotiating a commercial lease. Often, lease payments will be a small business owner’s highest monthly cost. Small business owners may feel intimidated by commercial landlords but having the correct attorney on your side can help ameliorate this feeling.

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The below list are the key components of a commercial lease that must be negotiated properly:

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1. The Parties

   1. Tenant

   2. Landlord
       

2. The Building

   1. Description of the Floor and Area

   2. The Use Clause

   3. Options

      1. Expansion

      2. Contraction

      3. Right of First Refusal
          

3. The Term

   1. Possession of the Premises

   2. Commencement Date

   3. Rent Commencement Date
       

4. The Rent

   1. Base Rent

   2. Operating Expenses Escalation

   3. Real Estate Taxes

   4. Tenant’s Proportionate Share
       

5. Operational Clauses

   1. Tenant Improvement Allowance

   2. Alteration to the Leased Area

   3. Landlord’s Responsibilities

      1. ADA

      2. Electrical Service

         1. Sub-metered

         2. Direct Metered

         3. Rent Inclusion

      3. Sprinklers

      4. HVAC and AC

      5. Water
          

   4. Landlord Warranties

      1. No Hazardous Materials

      2. Local Compliance

      3. Certificate of Occupancy Valid

      4. Space Use Complies with Certificate of Occupancy
          

   5. Miscellaneous

      1. Cleaning

      2. Building Access and Building Security

      3. Elevators

      4. Freight Elevators
          

6. Amendment to Lease

   1. Subleasing and Assignment

   2. Recapture by Landlord

   3. Additional Lease Terms
       

7. Miscellaneous Issues

   1. Security Deposit

   2. Letters of Credit

   3. Non-Disturbance

   4. Signage

   5. Casualty

   6. Relocation

   7. Demolition Cause

 

The attorney’s at Karpus Law have substantial experience negotiating commercial leases on behalf of small businesses.
Consult an attorney today: (973) 645-9453.