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Important commercial lease agreement provisions

On Behalf of | Jun 22, 2017 | Landlord/Tenant Matters |

The leases for California commercial properties in California are often several pages long and generally contain dozens of clauses. The signing of a commercial lease agreement often marks the beginning of a long and fruitful business relationship, but failing to read or understand certain key provisions of these legal documents can lead to protracted and costly landlord-tenant disputes.

Disputes over competition clauses can be especially contentious. These clauses prevent landlords from renting nearby properties to competitors of their tenants, and they may be of great importance to companies seeking to rent retail or restaurant space. Before finalizing commercial lease agreements, landlords and tenants should be familiar with provisions, such as escalation clauses, that specify when rents can be increased. Landlords may include fixed rent increases or they could link rents to their operating costs or an outside index such as the rate of inflation.

Other important commercial lease provisions include clauses that allow tenants to expand the space they rent or move into larger vacant areas of the building and improvements clauses that stipulate the work that must be completed by landlords before tenants move in. Provisions that allow subletting or assignment in certain situations could be extremely valuable to tenants. A tenant must still meet the provisions of its lease under a sublet, but they are released from their obligations in an assignment.

Lease provisions dealing with Americans with Disabilities Act compliance are particularly important in California where this kind of litigation is common and the penalties are severe. Both landlords and tenants are obligated to make sure that commercial properties are accessible to disabled individuals, and attorneys with experience in this area may suggest that qualified architects or engineers be called in to perform ADA audits before leases are signed.