For business owners, it’s imperative that your lease protects you and covers all situations that will allow you to conduct business with peace of mind. Your commercial lease is one of the most important aspects of your business and negotiating a favorable one puts you in the best position to succeed. If you’re the landlord, the commercial lease is prepared to favor you. That’s why you need an attorney on your side to make sure the lease is amicable for both parties.

Evaluate the length of the lease. A term of one to two years is usually best for small businesses with an option to renew included in the contract. This doesn’t tie businesses down for too long but gives you the option to stay if the space is a good fit. A shorter lease can also be in your favor if rents in the area decline or the area itself becomes unfavorable. But from a landlord’s perspective, longer leases provide better stability and are often more appealing.

Research comparable rents. An experienced business attorney knows what the going rates are in your area so you can negotiate a fair price. Part of negotiating renewal options is specifying rent increases to avoid surprises later on. Typically, landlords try to increase rents each additional year.

Gross vs. net leases. In a gross lease, all costs are included. In a net lease, there are costs in addition to your rent which might include maintenance or upkeep of common areas. Make sure your attorney fully details these costs upfront and negotiates these points for whatever side of the transaction he’s representing. Your attorney could also negotiate dollar amount caps to these costs or negotiate for a slightly higher rent in exchange for the landlord absorbing all such costs. This is also the point at which you determine whether there are separate utility meters or if utilities are apportioned among tenants based on square footage.

Seek favorable clauses. Modification to a lease that can benefit a business might include a clause that allows you to sublease the property should you need to relocate or close. Tenants may also seek a clause that restricts the landlord from renting out any other unit on the premises to a business like yours. A co-tenancy clause can protect you if a larger anchor tenant that brings business to you (like a large grocery chain) leaves. Tenants can also negotiate for improvements made to the property by the landlord before you move in.

Pay close attention to the termination clause. In most agreements, you’ll want a clause that allows time to cure a default before conviction, such as one that allows a tenant to pay one month’s rent instead of the entire amount due over the term of the lease. It’s also important to negotiate any penalties for early termination.

It’s a fact in business that disruptions happen. Whether it’s a flood, tornado, skyrocketing lease rates, or most recently COVID-19, businesses must often navigate serious, long-term business challenges. One of those challenges is how to renegotiate a commercial lease.

Discuss amendments to a lease. Most landlords and property managers are willing to discuss amendments to an existing lease to avoid litigation. This is due to several factors. Finding new tenants takes time and money. So does legal negotiation and litigation. Plus, most landlords have financed the purchase of their properties, so when a tenant fails to pay rent the landlord is forced to pay the mortgage out of its own pocket. During renegotiations, the landlord’s primary concern is maximizing the rent income stream to avoid defaulting on their own loans. While most landlords would rather avoid the trouble and expense of finding a new tenant or going to court, they are not shy about pressing their legal rights.

Closely review the lease. A tenant’s options may vary depending upon the circumstances of the business and the willingness of the landlord to renegotiate, but it all begins with a close review of the lease itself. A skilled attorney will help tenants understand what their current obligations are and make recommendations for amendments that need to be made, then negotiate with the landlord to bring them to fruition. Similarly, tenants may have valuable termination or renewal rights that can become bargaining chips in the discussion.

Draft a pre-negotiation letter. This should clearly outline what the tenant is looking for, whether that is rent reduction, space reduction, permission to sublease, and how the business plans to continue generating revenue. It should also include steps the tenant plans to take in order to minimize the time necessary to restore the company’s ability to pay rent in full. This establishes the basic framework for negotiations

If a tenant does not uphold the terms of a lease and doesn’t try in good faith to renegotiate with the landlord, the end result could be eviction. Reasons could include lack of payment, misusing the premises, damaging property, or engaging in unlawful activities.

In Florida, commercial landlords must give their tenants who have not paid rent a three-day advance notice before starting the eviction process. If a tenant is evicted for other reasons, such as misuse of the property, they need to be given 15 days’ notice before the process begins. If payment or corrective action isn’t taken, your business attorney will file an unlawful detainer complaint against them. Upon receiving the detainer complaint, tenants have five days to respond and the right to file a counterclaim. If a counterclaim is filed, the next step is to take the case to court.

If the eviction goes to trial, non-payment judgments typically favor the landlord. If that happens, the tenant has five days to vacate the property which a posted sheriff’s notice will enforce.

Whether it’s a lease negotiation, renegotiation, or eviction, it’s important to have an attorney like Edward Reyes on your side to help you navigate the legal landscape—whether you’re the tenant or a landlord. That can help resolve the issue with a minimum of time and frustration. Learn more by calling 813-421-3411.