3 Things for Landlords to Include (among many others!) in Every Commercial Lease

As if commercial writing and negotiating a commercial lease weren’t hard enough already, landlords sometimes have to face situations in which a tenant defaults on the lease agreement. Loss of rent is just one area in which you can lose money; the cost of recovering that income-e and evicting a tenant can amount to much more.

Because so many legal complications can arise from commercial leasing disputes, you should always consult our real estate attorneys before drafting or executing a lease agreement. The following three issues should be carefully considered and included in your lease, in order to protect your interests.

Acceleration Clause. If a tenant does default on the lease, recovering rent payments can be an arduous and time-consuming process. In the event of such a default, an acceleration clause will allow you to immediately demand payment in full for the remaining term of the lease.

Personal Guarantees. If a corporation, partnership, or limited liability company defaults on its lease, a judgment obtained can be difficult to recover because a business entity might not have assets. A personal guarantee signed by the owner of the company allows you to proceed with your claim against him or her personally.

Who pays attorney fees? Unfortunately, in the event of a default you are at risk of losing not only rent money, but also the attorney’s fees and costs of taking the matter to court. Your lease should include a provision addressing attorney’s fees in the event of a dispute. If your lease does not specifically provide the right for the prevailing party to recover attorney’s fees, it is unlikely that you will be able to recoup the fees in court.

The above are just three things that should be included, or at least carefully considered, for every commercial lease. But because real estate law is so complicated, you should always consult with our real estate attorneys before drafting or signing any agreements with tenants. We would be happy to review your current lease form and make suggestions for changes that will better protect your interests.

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