Business principals and investors across the vibrant and growing Portland metro area often deal simultaneously with bracing challenges and attractive opportunities.
In other words, entrepreneurs and established participants in the commercial realm are notably busy people who deal routinely with multiple and complex issues.
Real estate matters are a case in point.
The wide and varied universe of real estate transactions
Real property-linked concerns cannot be overstated in the business sphere. Their scope is vast, and the subject matter they entail is centrally relevant. A legal source addressing commercial real estate transactions prominently underscores that and notes key contracts, activities and concerns like the following:
- Purchase and sale agreements
- Financing and refinancing
- Dispute resolution
- Property lien claims and issues surrounding title
- Property management
- Lease matters (e.g., sale leaseback, subleases, option-to-purchase contracts and more)
Those bulleted points spotlight a wide range of real estate topics, yet they collectively comprise just a narrow snapshot of much broader subject matter marking the realty realm. Today’s post takes a look at what often spells a heightened concern for business principals, namely, a commercial lease.
Why a commercial lease invites proven legal input
A commercial lease can arguably be best understood through comparison with its residential counterpart.
Candidly, they are not the same, a point immediately noted in a national legal article highlighting commercial leases and linked provisions.
For starters, states that overview, “Commercial lease agreements are more complicated than residential leases.” Transacting business parties are deemed as relatively sophisticated by courts and not accorded the same comprehensive protections that customarily feature in the residential context. Terms are negotiable. Contracts can be notably lengthy.
The bottom line in any residential/commercial lease comparison necessarily stresses the “significant differences” between the two. Here are some things that must often be closely focused on in commercial lease negotiation and drafting:
- Rent specifics (How will rent be calculated? Will lessor or lessee pay for utilities, maintenance, renovations, insurance and other costs? Is a security deposit required? What is the understanding on rent increases?)
- Lease length (e.g., long-term or shorter-term with option to renew or perhaps purchase)
- Use clause addressing type, extent and potential expansion of activities a tenant may engage in)
- Agreement concerning lease assignment or subletting to another tenant/lessee
- Exclusivity (As noted in the above-cited overview, “An exclusivity clause will prevent a landlord from renting [nearby] space to a competitor”)
Myriad other issues and concerns can also arise for transacting parties seeking to negotiate and draft a commercial lease. A business client can secure tailored and proven advice from an experienced real estate legal team.