3 Things You Should Negotiate OUT of Your Lease

Your would-be landlord deals with commercial leases all day, every day. You do not. So, you may feel like you’re at an immediate disadvantage.

We highly recommend you work with someone who is experienced in negotiating commercial leases. They can spot red flags, and negotiate to remove parts of the lease that may be unfavorable to you.

No matter how “standard” your landlord claims the following things may be, an expert can get you out of these 3 clauses/ conditions.

1. Personal Guarantee

This may be something that the landlord insists on if this is your first lease or you’re running a new start-up. They may claim that they need some sort of protection in case your business defaults on the loan.

We always advise our clients that there are ways to sidestep any guaranty on commercial leases so that you’re not held personally responsible for any outstanding rent in the case of a default.

You can offer to:

· Increase your deposit
· Remove any free rent from the lease
· Decrease the tenant improvement allowance (more on that later)

This is very rarely the deal-breaker that it is made out to be during negotiations.

2. Unfair Sublet Terms

Your would-be landlord does not want you doing their job for them, or potentially making more money than they would off of this space.

Your lease may contain all sorts of conditions designed to deter you from subletting the space.

This may include:

· Cannot Discount Your Net Rent
· Subtenant Must Be at Least Your Financial Strength
· Must Sublet the Entire Space
· No Subletting, if the Landlord Has Competing Space

You may not think this will be an issue and subletting may be nowhere near your radar when you first sign the lease. However, things change. At some point during your lease, you may suddenly face the need to upgrade or downsize your space. Or you’re simply not using all of your space, and you see the potential to sublet a part of it.

Work with someone who can make sure these things are an option in the future.

3. Tenant Improvement Allowance

Yes, tenant improvement allowance is a good thing. However, if you’re running a cash-strapped start-up, you may need a bit more freedom for your cash flow.

A tenant improvement allowance would see your business being reimbursed for any funds (up to an agreed-on amount per square foot) every month to do things like paint the walls, or upgrade the bathrooms.

However, a cash allowance would simply give you that amount of money every month, without having to foot the initial bill yourself. This ensures your cash isn’t locked up in improvements in those financially lean early months.

These are only 3 of the countless things that may seem benign when you first sign your lease, yet come back to haunt you later on. If you can’t afford to work with a real estate lawyer, that’s OK. There are commercial lease experts who can review your lease for far less money, and still give you the advice that you need.

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