Commercial Lease Review

How to not be a hostage to your property.

A commercial lease review is needed when the tenant is the one drafting the lease. It shouldn’t come as a surprise that the side writing the contract is also the side in whose favor the contract’s terms will be leaning.

Commercial leases affect both the landlord and the tenant, but the landlord is the one who carries the ultimate burden of responsibility as the owner of the property. Not every landlord realizes the extend of costs of acquiring a new tenant – tenant improvements, broker fees, legal fees, loss of opportunity when one tenant is chosen over the other.

It is in landlord’s interests to acquire a strong, long-term tenant, the one who will keep renewing the lease, who will benefit the current tenant mix and whose use will add to the value of the property. it is expensive to acquire a new tenant, but it is even costlier to have to replace one. Prevention of possible future issues through a thorough lease review is the best strategy for a landlord.

The lease terms vary from one property and industry type to the next. The leases that require the most careful review are the NNN lease. There are many benefits to owning a NNN property. Rightfully referred to as a coupon-clipper, a NNN is an easy property to own – no active property management, no maintenance, no property taxes – all is paid by the tenant. The owner gets a check at the end of the month. Easy, right?

Here is the truth about NNN. In most cases, a NNN property is occupied by the national tenants, the big guys, who have enough legal and financial power behind them to pull the plug on the lease, call for a renegotiation of terms, or neglect their duties to the property.

Losing power to the tenant is a very a very uncomfortable position to find yourself in.  A lease review is your most powerful protection against the…well, a big bad wolf tenant.

In all fairness, not every NNN tenant will flex their muscles. But you can’t be putting your eggs into the “hope” basket. Big companies change their expansion plans. Your location could have a change in the operator. Changes happen. Sometimes for the best, sometimes for the worst. Your job is to anticipate these twists and turns and make sure your rights are protected. In writing.

There is only one time in the life of the lease when landlord holds the most negotiating power, and that’s before the contract is signed.

We will help you set the foundation of your relationship with the tenant right from the start, so you won’t be dealing with the power struggles down the line.

Mr. Moschetti has been representing landlords and high net worth individuals in purchase and sale contracts, lease negotiations and lease renewals for over fifteen years. See our offer below on how we can address your specific needs.