A commercial real estate lease is one of the most important contracts for a business. Because leases contain clauses that can't be broken, they are very consequential.
During the COVID-19 pandemic, the business world learned of a clause that was not typically included in a commercial lease. A "force majeure" provision would remove liability in the event that there was a natural and unavoidable catastrophe that prevented one party from living up to its obligations under the contract.
When signing a commercial real estate lease agreement, you might have a clause allowing you to lock in your lease terms. Keep reading to learn what a lock-in clause means for your lease.
What is a Lock-In Clause?
The lock-in clause restricts the early termination of a contract. For example, if a business agrees to lease a property for six years, the lock-in period might be two years.
The business tenant would need to stay in the space for two years or pay rent for the lock-in period if they choose to break the lease.
The lock-in clause has a remedy clause. When one of the parties to the contract decides to drop out of the contract, this clause spells out the remedy or compensation.
The notice period is also contained in the lock-in clause. The party who decides to drop the contract is obligated to give the other party notice in a reasonable period of time. The amount of time is agreed upon by both parties.
Commercial Lease Renewal
A commercial lease is a contract between a landlord and a business. The business agrees to lease terms for the rental of a property.
When the lease ends, the business has the option to renew. Because it is expensive to move a business, the lease renewal process is taken seriously to avoid costly mistakes.
Commercial Lease Negotiation
If you wish to avoid moving locations to save money and keep your employees happy, there are some steps to follow when negotiating a commercial lease. Let's look at a few.
1. Start Negotiations Early
Be proactive. Review your lease terms and contact your landlord a few months before your lease expires.
Also, stay abreast of market conditions to help in your negotiations.
2. What New Terms Do You Want?
Look at your space and think about new terms that might improve your situation. The landlord may be willing to update the space to keep you from leaving.
3. Set Lease Terms
What are the lease terms that benefit your business? Consider personal and economic factors when negotiating the terms of your lease renewal.
Lease terms can have a huge impact on your business and can spill over into your personal life, so scrutinize all the terms of the lease.
Commercial Real Estate in Davie, FL
Are you looking for a property management company to handle your commercial real estate in South Florida?
PMI Best Assets, located in Davie, provides both residential and commercial property owners with the highest quality property management services.
Contact us today. You can reach us through our website or by calling 954.368.5398 to schedule a consultation.