A commercial lease helps ensure that a landlord has a consistent stream of income from tenants. Most of the time, commercial leases run for multiple years, allowing for predictable revenue and minimizing the cost of renovations and cleaning in between tenants.
All too often, commercial property owners fall into a trap where they use basic lease documents that they downloaded from the internet. They do not customize the terms of their rental agreement but instead use the same terms for every tenant.
Customized lease documents or at least the inclusion of customized details in a lease can extend numerous valuable protections to commercial landlords. What types of lease inclusions may prove to be particularly beneficial for commercial landlords?
Force majeure clauses
Often, people talk about force majeure clauses as a way that tenants protect themselves. Also known as “act of god” clauses, force majeure clauses allow a party to terminate contractual obligations due to factors outside of their control. A force majeure clause integrated into a commercial lease can also protect a landlord from litigation if they become unable to continue providing space or maintenance services to a tenant.
Rules for lease termination
While a commercial lease may last for multiple years, the tenant may not be able to fulfill the agreement. Many businesses fail in their first few years of operating, and others fail due to expanding too rapidly. Landlords may need to include restrictions on lease assignment so that their tenants don’t come to the table insisting another party can take over their lease obligations. They may also need to clarify what scenarios might absolve a tenant of their obligation to complete the entire lease.
Clear maintenance standards
Some businesses are large enough to have custodial and maintenance professionals on staff. They can handle issues that arise with their premises without involving a landlord. Other times, smaller businesses may expect that landlords provide them with facility maintenance and repair services. Lease terms should clearly outline what types of maintenance support the landlord may provide and what costs they assess for those services.
Reviewing and modifying commercial lease terms to address the risks and concerns related to each new tenant can help protect those who own commercial properties. A customized commercial lease can significantly limit the risk inherent in taking on a new tenant.