ABA Family Legal Guide

Forming and Operating a Small Business

Starting a Business

Commercial Leases

What information does a commercial lease contain? How should I approach it?

The saying "Don't sweat the small stuff" does not apply to commercial leases. Leases are binding legal contracts. What you agree to today will affect you and your business where it counts most--the bottom line--for years.

First, read the lease. All of it. Even the small print. Especially the small print. Now is the time to be picky. Be clear on exactly what is included in the lease. Is parking included? Who is responsible for keeping the sidewalk and parking lot cleared of ice and snow? If the phones go down, who is responsible for getting them fixed? Who pays for the cleaning crew? Elevator repairs? Security? Minor repairs? Bathroom supplies? Garbage removal? Double check the obvious: square footage, the name of the company, and the length of the lease.

Most landlords will provide you with their standard lease form. This is probably a "one size fits all" type of lease that may be inappropriate for your business. Remember, the landlord's lawyers drafted this lease for the benefit of the landlord. Just because they call it "standard" doesn't mean it's fair or that you can't negotiate the terms.

How much leverage you'll have in the negotiations depends on the market you're considering. If there is a shortage of commercial real estate, you may have to do more compromising than if there is an abundance of space available.

Second, if it isn't in the lease, it doesn't exist. Forget what the landlord promises you as you're negotiating the lease. If it isn't in writing, it isn't yours. For example, the building is patrolled by security guards hired by the landlord. If your lease does not include language that the landlord will provide security for the customers and the tenants, the landlord has the right to stop providing security, and there's nothing you can do about it. On the other hand, if your lease states that the landlord will provide a certain number of security guards to patrol the building during business hours, the landlord must do so.