Prepare yourself for lease negotiations by studying up on provisions you might see in commercial leases. Here are a few provisions that you might not have heard of, as described in the article, “Real Estate – Commercial Leasing”
- “Go Dark” Provisions. As a tenant, you will want to see whether your lease allows you to stop operating in a space if necessary while still adhering to lease terms and paying rent. Retail businesses might find themselves in a position of having to “go dark.” Landlords will typically oppose this, as it affects the vitality of the location, and will want to combat it with a recapture clause, which allows them to terminate the lease and control re-leasing of the space.
- Tenant Purchase Options. Sometimes leases stipulate that a tenant has first rights to purchase or refuse the leased property if the landlord decides to sell it, which means the landlord must offer the space to the tenant before offering it to a third party.
- “Make Good” Provisions. These provisions lay out what a tenant needs to do at the end of a lease term to return the space to the condition it was when it was first rented out to them. On the one hand, landlords might want tenants to remove any additions they made because they will be problematic for the landlord down the line, but on the other hand, landlords might want tenants to leave improvements that the tenant paid for to make the space more appealing for future tenants.
It is important to understand these provisions and how they could potentially affect your business throughout the duration of your lease.