Commercial real estate leasing in Louisiana often creates a complex dynamic between landlord and tenant. Here at the Smiley Law Group, we understand that both parties need to be on board from the start, with all terms of the relationship clearly defined in a solid and enforceable lease agreement. This document becomes the foundation for a long-term business relationship between landlord and tenant that should protect both parties’ rights.
Unfortunately many commercial lease agreements are prepared by and favor the landlord. This can put tenants in a difficult position unless they carefully review the lease, understand all the terms and obligations contained in it, and negotiate any modifications that will balance the scales on the agreement. Having a qualified Louisiana commercial real estate lawyer in your corner ensures that you preserve your rights under the lease and get the fairest deal possible. Here are three things we think everyone signing a commercial lease agreement should pay attention to.
What is the length of the commercial lease?
Depending on the size and nature of your business you will want to be conservative in the initial lease term length. For small businesses a two-year lease works best with optional renewal clauses included. This allows you to test out the location and the landlord to see if both are a good fit. For businesses that depend on their location as a key component of the business, such as high-end clothing stores or restaurants, then longer-term are optimal. Here at Smiley Law we have client who have commercial lease agreements that range from month-to-month all the way out to thirty (30) year terms.
What rent are other businesses with similar spaces paying in the area?
Your rent in a commercial lease agreement will be one of the biggest business costs each month. Knowing the general landscape for rent payments helps you negotiate a better price. Do not go into the lease negotiation blindly! Be sure to negotiate renewal options and a schedule of any potential increases so that everything is on the table up front. Sometimes paying a higher rent now with a cap on future increases can save you money in the long run.
What do the termination clauses say?
Business conditions change all the time. Know what the obligations and rights are regarding termination of the lease for default or other reasons. Make sure that you negotiate clauses that allow a reasonable period to cure any defects prior to eviction. Another thing to consider is that you may want to move out early. Make sure that you negotiate early termination penalties so that you have flexibility.
The most important thing you can do is read your commercial lease carefully so that you understand it completely. Smiley Law has extensive experience with lease drafting and analysis. Whether you’re starting from scratch, revising an old lease, or simply want a fresh set of eyes to review a lease form you’ve been using for years, Smiley Law can provide valuable advice to ensure your lease says what you want, and is enforceable if it ever ends up in front of a judge. Contact the Smiley Law Group for a free consultation today.