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Bad Leases and Terrible Landlords: How to Play Hardball

All business, big and small, have had to negotiate a commercial lease at some point in time.  While most encounters are uneventful, some businesses are faced with unreasonable landlords that impose draconian lease terms and carry a “take it or leave it” attitude.  Here are some helpful tips to negotiating unreasonable lease terms:

  1. Know the Market – It is always important to get information on what is commercially reasonable in your geographical location and market. Some landlords take advantage of a business owner’s inexperience and represent unreasonable terms (e.g., profit sharing, ownership options, operational control) as commercially acceptable.  We recommend that you reach out to an experienced commercial broker with knowledge and access to comparables in the area.
  2. Read the Lease – A major mistake that tenants make is not reading the lease carefully and confirming the lease terms are consistent with what was discussed with the landlord. We recommend getting a high-level review done.
  3. Do Not Take the First Deal – While we understand location is an important factor for any business, taking the first deal without shopping around can provide a distorted picture of the real estate available. Have a back-up plan in place!
  4. Look for Hidden Costs – Hidden costs like equipment maintenance (HVAC units), taxes, and upkeep of common areas can easily add up and impose an unexpected financial burden for any business. Get information on these hidden costs up front and the life expectancy of equipment, and negotiate them down if possible.
  5. Get Professional Help – In these situations, the assistance of an attorney well versed in lease negotiations is helpful as lease terms, however unreasonable, are always negotiable. If not, it is not worth negotiating with that landlord.

The knowledgeable attorneys at Garcia & Gurney, ALC can assist business owners in negotiating commercial leases.  To speak with a Pleasanton attorney today, contact us by phone at 925-468-0400 or online.

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The information contained in this article is provided by Garcia & Gurney, ALC (“G&G”) and is provided for educational and informational purposes only and should not be construed as legal advice or an offer to perform services on any subject matter. Recipients of this article should not act or refrain from acting on the basis of any information included in this article without seeking appropriate legal advice on the particular facts and circumstances at issue from an attorney licensed in the recipient’s state. G&G expressly disclaims all liability with respect to actions taken or not taken by the recipient based on any or all of the information or other contents in this article. This article not intended to constitute an advertisement for professional services or any other services. Nothing herein is intended to create an attorney-client relationship and shall not be construed as legal advice.

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