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Introduction to Commercial Lease Agreements

Business Law

For tenant and landlord alike, your lease is one of the key legal documents you possess. It sets the tone of the business relationship as well as the legal relationship entered into by the tenant and the landlord.

In a commercial lease, the landlord-tenant relationship is very much a business relationship in addition to being a legal relationship. Unlike many business relationships however, one side of the tenant-landlord relationship will have greater leverage or power over the other. Even so, it is in all parties’ best interest to approach the landlord-tenant relationship in good faith. Acting as a good landlord means a greater likelihood that a tenant refers new tenants, and acting as a good tenant means greater benefit of the doubt extended during occupancy and also in the event of a lease renewal.

The lease proposed by the landlord very often acts more as a jumping off point from which changes can be negotiated by the parties. When negotiating a commercial lease, both the landlord and tenant should take the time to evaluate their goals before entering into any agreement. It is to the greatest benefit of both parties that you enter into this negotiation with a negotiation strategy, with a firm idea of what your own bottom line will be, and with an understanding for the limitations of your flexibility in the negotiations. It is also important to recognize that if the arrangement feels off or is not meeting your needs in either a lease agreement or lease renewal, you are able to walk away and find a different, better leasing relationship—there is no obligation to accept the first landlord or tenant that you’ve found.