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Negotiating a commercial lease is hard. If you are all alone, here are the commercial lease questions you need to ask to ensure you can level the playing field with your commercial, retail, office, or industrial landlord.
1. Is there a floor plan attached as an exhibit?
2. Is the measurement method stated?
3. Is the usable area and rentable areas displayed?
4. Does the landlord have the right to remeasure?
5. Who measured the building?
6. Are the common areas fairly allocated?
7. Is it clear that the denominator is all rentable area of the building and not leased area?
More on how sneaky landlords can be with measuring space here:
8. Do you have the right to expand?
9. Are there notice dates or deadlines?
10. Is the landlord required to give you advance notice of option expiration date?
11. Is the landlord required to provide adequate information on upcoming availabilities?
12. Can the option be exercised if you are in default?
13. Can the option be triggered by a subtenant or assignee of yours?
14. Are option spaces clearly identified on a floor plan?
15. Are option space sizes clearly identified?
16. Can you take less than the full expansion area?
17. Is your right one time or continuous?
18. Are existing tenants permitted to extend or renew leases?
19. Do you have to extend your lease when taking the expansion?
20. Do you get an allowance or pro-rata equivalent of incentives from the original lease?
21. Is the space delivered as-is or is there landlord's work included?
22. Is the rental rate fixed or market?
Some serious talk about expansion rights, with some seriously bad dancing here:
23. Do you have an option?
24. Do you have more than one option?
25. Is there a deadline to provide notice?
26. If the deadline has passed, do all subsequent options fall?
27. Is the landlord required to give advance notice?
28. Can you exercise the option if you have been in default?
29. Is it a fixed base rent or market rent?
30. Who determines market rent?
31. What is the definition of market rent?
32. Is there a right to arbitrate?
33. What is the process of picking arbitrators?
34. Who pays for the arbitrators?
35. Can you renew for less than the full premises?
For more on the option to renew, check this video out:
36. Do you have an option to cancel?
37. Are there any restrictions or conditions?
38. What is the notice period?
39. Is there a termination penalty?
40. Does it apply to all or a portion of your space?
41. Does the landlord have the right to relocate you?
42. What is the notice period?
43. What costs are paid by the landlord? Does it include soft costs?
44. What if the relocation space is larger than your existing space?
45. Is there a limit to the number of times the landlord can relocate you?
46. Are there any landlord restrictions to relocating you?
More on the landlord's right to relocate tenants here:
47. Is there an obligation to restore the premises to base building condition?
48. Does this obligation survive the expiry of the lease?
49. Does the landlord have the right to take custody of any personal items?
50. What happens to trade fixtures?
Be sure that your letter of intent specifies that you do not have a makegood clause, then it won't show up in the lease.
More on that here:
51. Do you have the right to audit?
52. How long does the landlord have to produce operating cost statements?
53. Is there a list of inclusions and exclusions for operating costs?
54. Have you compared additional rent to comparable buildings?
55. What is the management fee? Is it competitive?
56. Is the management fee also applied to realty taxes?
57. Was there an initial rental deposit?
58. Has it been exhausted?
59. If not, does the remainder apply to the last month of rent, or is it a security deposit?
60. Is it held in an interest-bearing account or not?
More on commercial lease deposits here:
61. Is there a clause that states the landlord must provide reasonable temperatures?
62. Are business hours stated?
63. Can you have HVAC after hours (an often forgotten about commercial lease question)?
64. If so, what is the charge?
65. Can you install supplementary HVAC?
66. Does the landlord have the right to limit your use?
67. Separately metered or not?
68. Does the landlord have the right to install separate meters?
69. Do you?
70. Do you have the right to enforce the landlord to separately meter for other tenants?
Speaking of electricity, a quick word from the most electrifying man in online commercial lease reviews today (...yes, he's a grown man wearing a referee outfit):
71. Do you have to keep the space up to a specified standard?
72. Are there any repair obligations that are normally the landlord?s (HVAC, roof, plumbing)?
73. Is there a management fee to oversee your tenant improvements?
74. What is the landlord approval process?
75. Is there work that can be done that does not require landlord approval (i.e. non-structural, decorative or small jobs)?
76. What is the time period (i.e. last 12 months of the lease term)?
77. What notice period must be provided?
78. Is the landlord restricted in signs that can be posted at the premises?
79. How long until the landlord assesses the damage?
80. What percentage of the building has to be damaged before leases are terminated?
81. Who has the right to terminate?
82. How long is the landlord cure period?
83. Do you have business interruption insurance to match that time period?
84. What are your rights if the cure period is not met?
85. Does the landlord have enough insurance coverage to rebuild?
86. Does rent abatement start on the date of the damage?
87. Do you have the right to sublet your commercial space?
88. Can you sublet a portion or does it have to be the entire premises?
89. Can you discount your base rent on sublet?
90. Can you profit from subletting?
91. Can you sublet to other tenants in the building?
92. Can you sublet if the landlord has competing space available?
93. Can you sublet to a tenant the landlord has been negotiating with?
94. Are there restrictions on the type of tenant you can sublease to?
95. Can you advertise a rental rate on your sublisting?
96. Does the subtenant have to be as strong as you financially?
97. Can you assign without consent to a parent, affiliate or subsidiary?
98. Can you assign without consent to an entity resulting from a merger, acquisition or reorganization?
99. How much does it cost for the landlord to review the sublease document?
100. How long will landlord approval take?
101. What happens if the landlord fails to make payments to third parties?
102. What happens if the landlord fails to perform a covenant in the lease (such as repair and maintenance)?
103. Do you have the right to overhold as a month to month tenant?
104. What is the overhold charge (normally 125% - 200% of net rent)?
105. Can the landlord elect to extend the lease?
106. Is your parking ratio stated in the lease?
107. Is the priced fixed for the term and any renewals?
108. Do you have the floating right to increase and decrease the stalls you require?
...and bonus question:
109. Does the lease have a personal guarantee and can you get out of it?
Learn more about what you need to know about commercial lease personal guarantees here (no bad dancing in this video):
If you still have commercial lease questions about the commercial lease questions you need to ask, let us know!