Reviewing Commercial Leases – Why Is It Important

For over 30 years, the attorneys at HALE BALL MURPHY, PLC have been involved in the drafting, review, enforcement and defense of commercial leases (shopping center leases, office leases, etc.)  for both Landlords and Tenants.  During that time, the lawyers at HCP have learned the importance of addressing the critical issues during the negotiation stage of a lease.

Most commercial leases are fundamentally the same.  They all address the same basic issues.  And, for the most part, they all start out very landlord-friendly.  HCP’s goal in reviewing the leases is to assure that: (i) the lease adequately addresses the initial development requirements for the premises; and (ii) the lease provides you a reasonable means for operating in the premises including periodic improvements; and (iii) the default provisions are reasonable.

The first issue, making sure a lease adequately addresses the initial development requirements for the premises requires coordination between you, HCB, the architect and a contractor.  You want to make sure you have the professionals (the architects and contractors) fully inspect the premises to assure that you and they understand the steps necessary to develop the premises.  For example, it is no unusual for the unprepared tenant to find out after the lease is signed that the cost to develop the premises is double the expected cost.   Or, there may be unexpected permitting issues that require unexpended repairs.  Such developments result in a severe drain on the cash flow of a new business, which may be fatal to its success.

The second issue, making sure the lease provides you a means to operate in the premises during the life of the lease, again protects the economics of your business.  Some leases require costly upgrades at the sole discretion of the landlord, while others require landlord consent (including architectural plans) for simple cosmetic upgrades.  These types of issues are unlimited.  HCP attempts to cut through the problem areas to try to protect you from unexpected cash outlays during the life of the lease.

The final issue is critical to protect you against a “technical default” that opens the door for the landlord to try to kick you out or, worse, have a basis for raising your rent.

HCB is ready to work with you to review your leases.  HCB has a proven system that results in changes that are generally deemed reasonable by the landlords and provide greater protection to you.  Please feel free to call Robert Baumgartner, Justin Berger, or Scott Pohlman, 703-591-4900 to discuss this further.