Commercial Lease Pitfalls

Hypothetical:  Mary’s floral shop, Mary’s Wedding Flowers, Inc. is excited because the shop has outgrown the space, and therefore, she needs to rent a larger space.  Mary has negotiated the contract with the potential new landlord. She brings the contract into her meeting with her business attorney as she realizes after being in the school of hard legal knocks that before she signs anything she needs her attorney to review it.  Mary explains to the attorney what she believes the agreement is and waits to hear the attorney’s response.  The attorney points out the following:

• Although Mary understands that she agreed to pay rent of $2,500 per month, she did not realize and did not understand that she also had to pay additional costs which includes 25% (she is renting one-quarter of the building) of the building’s property taxes, utilities, and maintenance costs.
• The signature line was her individual name, and not the corporation’s. Thus, she is personally responsible. Furthermore, the corporation has not leased the building, but Mary personally would have leased the building if she had signed it with her individual name.
• She was required to pay a security deposit of $2,500, but there is no provision that states she receives her security deposit back. In commercial leases, if the lease does not state that the security deposit is to be returned and if Mary wants her security deposit back she then would have to litigate the issue.
• The landlord states that building rules apply, but the rules are not attached. The building rules can be arbitrary and capricious, and it is essential that Mary review the building rules to see if she agrees to comply with them.  Furthermore, if the rules are not provided, nothing prevents the landlord from making them up later.

 

Spangler and de Stefano, PLLP assists clients with commercial leases. It is important that you have your attorney review your lease prior to signing it to avoid common pitfalls.

The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.