Commercial Leases: Top Ten Things to Look Out For as a Tenant

Nov 05, 2013

By Craig T. Watrous 

Commercial leases often last for many years, even for decades. The space your business rents is the backbone for your company's operations.  It’s critical to fully understand and negotiate the terms and conditions of your commercial lease so that your company has the flexibility and certainty it needs to do business without interuption or unnecessary risks. 

Commercial leases in Colorado are often long, complicated legal documents, heavily sided in favor of the landlord.  Commercial leases often lack pro-tenant rights and protections typically found in residential leases  The following is by no means a complete opinion on commercial leases, but every tenant should carefully consider these ten issues prior to entering into a commercial lease: 

  1. Term and description of the leased premises
  2. The commercial Landlord’s obligations regarding the premises, building, and common areas.
  3. How is the rent calculated and what is included in the rent
  4. Inclusions in common area expenses - how these expenses are calculated and the commercial Tenant’s accounting and audit rights of the same
  5. Tenant's remedies for the Landlord’s default under the lease (often these have to be negotiated as usually none are present at the outset)
  6. Landlord's remedies for the Tenant’s default under the lease and the Tenant’s right to cure its defaults
  7. What happens upon the total or partial destruction, casualty or condemnation of the leased premises, building, and/or common areas and how is such destruction, casualty or condemnation defined
  8. Parking: location, space, and adequacy for both customers and employees
  9. Landlord representations and warranties
  10. Indemnifications

(Mallon & Lonnquist, LLC, is a real estate, business, employment, and litigation law firm. Craig T. Watrous is a Colorado real estate attorney with Mallon & Lonnquist, based in Denver, Colorado. Craig regularly represents clients on both sides of commercial leases, both tenants and landlords. Craig can be reached at cwatrous@mallon-lonnquist.com.)

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