Understanding Commercial Leases and Clauses

Commercial leases are needed to rent a commercial building. However, leases and the clauses included in the leases can be complex and confusing. Before signing any contract, always meet with an attorney to review the clauses and be on the lookout for the following important ones.

 

What is the Space Being Used For?

Of course, most commercial leases require an explanation of what the building is going to be used for. This is because some limitations may be set. 

 

Permission will most likely be needed if you are looking to change a retail store into a restaurant since it will require lots of renovations. 

 

When the lease includes the terms “exclusive use”, it will list what the building is limited to turning into. Always read over this clause carefully. 

 

If you plan on changing a retail area into a restaurant, you will most likely need permission to do so since there will be lots of renovations to be made.

 

The lease could have a clause that includes the terms of “exclusive use”, which limits what you can do with the building you are leasing. All parties must agree. 

 

Termination and Sublease Clauses

These clauses might be the most important part of commercial contracts. 

 

What happens to the commercial lease if a business fails? There is usually a sublease clause that discusses if you are allowed to sublease the building out. 

 

In addition, there is a termination clause that discusses if the lease is allowed to be terminated under certain circumstances.  

 

Renovation Clauses

Renovation of a commercial building is much more complex than just renovating or improving a home

 

Before signing a commercial lease, always discuss with the landlord what they are responsible for. Meaning, what changes must they make to the building before handing it over.

 

The renovation clause will also discuss what renovations you are allowed to make while leasing the building.

 

The Commercial Boom in Arizona

Even during the pandemic, the state of Arizona has seen a boom in construction projects and real estate developments. If you are looking to expand to Arizona, you should speak with a real estate development attorney in Phoenix