Negotiating a commercial lease in California can feel overwhelming. Understanding the most important legal terms helps protect your business, avoid surprises, and create a lease that aligns with your goals. With the right preparation, small business owners can enter negotiations confidently.
Act today to protect your business. Contact Purdy & Bailey, LLP online or call (858) 360-7080 to review your lease and ensure your business is safeguarded. Reach out now.
Rent and Payment Terms
Rent is more than just the monthly number. Make sure you understand all costs before signing.
- Base Rent: The fixed amount you pay each month to occupy the space.
- Additional Rent or CAM Charges: Extra costs, such as property maintenance, insurance, or shared expenses.
- Rent Increases: Many leases include scheduled rent hikes, often tied to inflation or property expenses.
- Payment Details: Be aware of due dates, grace periods, and late fees.
Always clarify all charges in writing to avoid unexpected bills later.
Lease Term and Renewal Options
The lease length and renewal options affect your long-term plans.
- Lease Term: Typically 3–10 years, depending on the property type and business needs.
- Renewal Rights: Check if and how you can extend or renegotiate the lease.
- Early Termination: Some leases permit exit under specific conditions, often accompanied by penalties.
Clear terms help plan growth and prevent costly surprises.
Maintenance, Repairs, and Improvements
What each party is responsible for should be clearly outlined in your lease.
- Landlord Responsibilities: Typically include structural repairs, roofing, and major systems.
- Tenant Responsibilities: Often cover minor maintenance, cleaning, and utilities.
- Improvements: Confirm whether you can make changes and who will cover the costs.
Documenting responsibilities prevents disputes and unexpected expenses.
Subleasing and Assignment
Leases may limit your ability to transfer or share your space.
- Sublease: Renting part or all of your space to another business.
- Assignment: Transferring your lease entirely to someone else.
- Landlord Approval: Most leases require written consent for subleases or assignments.
Knowing these rules gives you flexibility if your business changes.
Default and Remedies
Understanding default rules helps you manage risk.
- Default Events: Typically include missed rent, unauthorized changes, or failure to follow lease rules.
- Cure Periods: Time allowed to fix a default before penalties apply.
- Landlord Remedies: May include late fees, eviction, or lease termination.
Being aware of these terms lets you respond appropriately if issues arise.
Insurance and Liability
Insurance protects both you and the landlord.
- Liability Coverage: Protects against claims for injury or property damage.
- Property Insurance: Covers your equipment, inventory, and business assets.
- Indemnification: Specifies when one party must cover losses of the other.
Ensure that insurance requirements meet your business needs without incurring unnecessary costs.
Preparing for a Smooth Lease
Taking action before signing helps your lease support your business.
- Review business formation documents to confirm ownership and authority to sign.
- Keep clear records of all communications with the landlord.
- Plan for future growth, downsizing, or relocation to avoid restrictive terms and conditions.
Preparation ensures your lease works for your business now and in the future.
Conclusion
Commercial leases in California often contain numerous terms that can significantly impact your business for years to come. Understanding them allows you to negotiate confidently, avoid costly mistakes, and protect your investment.
Safeguard your business during lease negotiations. Contact Purdy & Bailey, LLP to review your commercial lease, clarify responsibilities, or explore adjustments. Call (858) 360-7080 or visit our contact page today.