An Introduction to Best Practices for Commercial Rental Properties

Whether you are an investor or a business owner, navigating commercial rental properties can be challenging. Commercial leases are generally longer than residential leases and the terms vary according to the type of property. Here are some best practices when transacting in commercial real estate.

Understanding a Commercial Rental Agreement

Generally, the owner has more rights and less responsibilities under a commercial lease than a residential lease. As either the owner or the lender, it is important to make sure your rights are protected under the agreement you sign and you understand the extent of your agreement. Lease agreements can be long and laden with complex clauses. Sometimes the best way to understand what it entails is to have an attorney translate it for you and help you understand what standard practices are in your community and nationwide. It is best not to go into any agreement unless you understand the full extent of what you are signing.

Working with a Commercial Real Estate Broker

When it comes to knowledge of commercial real estate, a local brokerage (preferably one that comes on recommendation) is the best way to make sure you get all the knowledge you need. If you hire a real estate attorney to help you handle your purchases or lease agreements, they will likely have recommendations of brokerages in your vicinity. A broker can narrow your search of property and help you find what you are looking for in the commercial arena.

Lease Terms

Make sure the lease terms you agree to are favorable. Contrary to what you might think, negotiations are common in commercial leasing. You can ask your attorney to assist you in coming to favorable terms depending on your situation. Nothing in a lease is set in stone, at least not until you sign on the dotted line. The following terms may be negotiated provided the other party to the agreement is willing to bend:

• Length of the lease;
• Availability of subleases;
• Lease payments;
• Responsibilities of the parties for repairs and maintenance; and
• Many other terms may be negotiated given the special circumstances of the property in question.

Getting Legal Help

If you are purchasing or leasing commercial rental property, you are advised to get the assistance of an experienced real estate attorney in your area. An attorney can help you review documents, draft agreements and answer any questions you may have about your particular commercial property.