- posted: Jul. 26, 2017
- Real Estate
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:
- 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.
- 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.
- 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!
- 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.
- 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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