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Business principals need to tread carefully with commercial leases

On Behalf of | Jan 5, 2021 | Real Estate |

Here’s a point worth noting for any New York City metro business principal or would-be startup entrepreneur who is looking to execute a commercial lease without having any prior experience doing so.

Please take due note of this: Even if you have inked residential leases as either landlord or tenant in the past, rest assured that your takeaways from doing so are largely irrelevant in negotiating and executing a commercial lease.

Because, candidly, the parameters surrounding the two types of leases differ distinctly in their details. Although there can sometimes be some overlap, experienced lessors and lessees in the business realm know that a commercial lease – even a relatively simple one – generally far surpasses its residential counterpart in both its tailoring and complexity.

Leasing parties absolutely need to know that, which is a point we underscored in a commercial lease-focused Asterita & Associates blog post from early 2020. We noted therein that a commercial lease contract “can have a massive impact on earnings and future freedom,” making it imperative for a transacting party to “absolutely know what the lease should contain before moving forward.”

One thing it must assuredly contain, and in clearest terms, is a protective umbrella of negotiated safeguards relevant to all key points. Those can vary materially in a given case, since commercial players have unique needs and interests. That fact alone injects considerable variability, flexibility and tailored possibilities into any commercial lease.

An in-depth overview of commercial leases duly stresses that “failure to determine requirements (e.g., re rental amount/term, improvements, signage, exclusivity, assigning/subletting and additional matters) prior to committing to a lease can lead to unfortunate consequences.”

Timely consultation and on-point input from a proven real estate legal team can help ensure that potential downsides relevant to lease execution are avoided and that a client’s business interests are fully promoted.