Negotiating Your Commercial Lease

Making sure you are not on the wrong side of a one-sided agreement

Most businesses lease the property where they do business. The lease can be a significant investment for a business, and sometimes can even be the difference between enjoying a profit or suffering a loss. The lease can also commit a business for an extended period of time, closing off other possibilities. Consequently, it is very important that business owners negotiate carefully when choosing their lease terms and hire an experienced Arizona real estate attorney to review the contracts.

Commercial Lease Negotiation

Forming a commercial lease is very different from forming a residential lease. Commercial tenants are assumed to be more sophisticated and so they are given fewer protections under the law. Furthermore, the terms of a commercial lease are generally much more negotiable than the terms of a residential lease. The first draft of a commercial lease that is given to a potential tenant usually has terms that strongly favor the landlord. However, it is expected that the tenant will negotiate more equitable terms. The following are some basic questions that should be clearly answered in your lease:

  • What is the term of the lease and when does it begin? Is there a renewal option and whose option is it?
  • Is the leased property clearly described? Does it include bathrooms, common areas, or parking?
  • Who pays the utilities, repairs, taxes, and insurances?
  • Do you have a gross lease, a net lease or some combination?
  • Is there an exclusivity clause that prevents the landlord from renting to a competitor? What is the definition of a competitor?
  • How much is rent? Does the rent increase each period? Is there a cap on the amount that rent can increase?

 

Careful Review of your Commercial Lease

There are many, many more significant provisions that will be important in your lease. Commercial leases can become complex, and it is important that you consult with an attorney experienced in real estate transactions to ensure that you obtain a fair commercial lease that will benefit your business. Many of the Mesa real estate attorneys at Gunderson, Denton & Peterson have experience reviewing, negotiating and litigating commercial leases, and frequently counsel with clients to identify key issues and protect clients’ specific lease interests.

Published By:

Gunderson, Denton & Peterson, P.C.
1930 N. Arboleda, Suite 201
Mesa, Arizona 85213
Office: 480-655-7440
Fax: 480-655-7099

Re-Posted from: http://gundersondenton.com/real-estate-law/negotiating-commercial-lease/

What if any effectivness does a personal guarantee have when included on a Note or Deed of Trust in Arizona?

On documents pertaining to properties would the personal guarantee provide protection to us as a lender?

A: A personal guarantee is an important protection and I would almost always require one as a lender. However, it needs to be drafted properly and in conjunction with the other loan documents. There are specific Arizona statutes on this issue, and they must be followed, or the guarantee could be worthless.

* This answer does not constitute legal advice. I am admitted in the State of Arizona only. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. You should not rely on this advice alone, and nothing in these communications creates an attorney-client relationship.

Answered by Arizona Real Estate Lawyer at Gunderson, Denton & Peterson, P.C.
Re-posted from AVVO Legal Questions & Answers.

Landlady has misstated square footage on our commercial lease and taken prime parking spots to give to other tenant

I have a small cafe. The lease agreement states I am renting 1100 square feet, but there is only 950. The landlady first stated she measured it herself. When I brought up the issue a year or so later, she stated the square footage came from the appraisal, but will not give me a copy. Also, the parking we share with our neighbor was removed and given to that adjacent neighbor to use for outdoor seating and a drive-thru. This was parking that had signs stating it was for our address and our neighbor’s. There are other unscrupulous issues with this landlady (real estate broker), but the above two are the largest. We have been leasing the space for 3.5 years and the lease ends (or can be renewed) in three months. Is it worth my time to seek justice in this matter? How should I proceed?

A: This comes down to two things. First, a court will look to the lease as the primary place to determine what the parties agreed to. So the lease provisions (or absence of lease provisions) are important. Second, a court will look at the communications between the parties. What did the landlady say to you? What did you say to her? What did everyone know about the signs? When were they put up and who agreed to them? That sort of thing.

Whether it’s worth your time to pursue it depends on how much you think you’ve been damaged. Certainly as you decide whether to renew the lease, you should be careful that everything important to you is included in the renewal.

Answered by Arizona Real Estate Lawyer at Gunderson, Denton & Peterson, P.C.
Re-posted from AVVO Legal Questions & Answers.

Sharing Property Losses

My partner and I bought a piece of land 5 years ago. It was for $420,000. I paid half cash, about $210,000 and my partner agreed to make monthly payments until it was paid off. The value of the land went way down and my partner stopped making payments. In 5 years, he made about $70,000 in payments. We settled with the bank and paid $10,000 is settlement through short sale. We split the settlement fee half and half. I am asking my partner to shoulder some of my loss by splitting the total loss. He says that he is not responsible for my loss. I have witnesses supporting my claim that we were 50/50 partners. However, we did not put anything in writing. Although she made the monthly payments for 5 years. Am I stuck with this huge loss or can I sue my partner for the loss and damage to my credit rating? I must say that my partner and I share a few other properties and he has other properties as well. I just do not feel that because the value of the land went down, I should suffer, where he walked away with much less losses. What can I do?

A: The answer to this question is yes, you do have a claim. It is a bummer that your contract was not in writing. But that does not mean it is not enforceable. If there are email or other written documents confirming your deal, that will help. At any event, you may also have a claim for something called “contribution,” which would require your partner to pay his half of the losses of your enterprise. I have handled these cases before and would be happy to discuss your options if you would like.

* This answer does not constitute legal advice. I am admitted in the State of Arizona only. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. You should not rely on this advice alone, and nothing in these communications creates an attorney-client relationship.

Brad Denton, Mesa Business Attorney.
Re-posted from AVVO Legal Questions & Answers.

Can a voluntary dismissal “without prejudice” still give rise to a malicious prosecution claim?

If a party who brings a civil action (without probable cause and with ulterior motives) against a Defendant voluntarily dismisses their own suit without prejudice, is it is ever possible that the original Defendant may still potentially bring a future malicious prosecution claim against the original Plaintiff? Or, does a voluntary dismissal without prejudice ALWAYS/automatically eliminate the possibility of a future malicious prosecution claim being brought?

Additional information
Landlord brought eviction action against tenant, alleging an unauthorized occupant was living in tenant’s apartment, but failed to offer evidence at the forcible detainer hearing. At the hearing landlord stipulated to voluntarily dismissing action if tenant paid the previous month’s rent of which the landlord had already rejected prior to the hearing, specifically stating to the tenant in writing that they could not accept rent due to the pending outcome of the hearing. Tenant had voluntarily vacated the apartment just prior to the hearing due to landlord’s constant harassment over several months. The landlord was given back the keys to the apartment prior to the hearing, yet still went forward with the hearing even knowing that the tenant had already vacated the apartment. The landlord’s stated basis of moving forward with the forcible detainer hearing was to collect the rent from the tenant, however, this was the same rent that they’d already just rejected from the tenant in writing prior to the hearing.

A: Usually you need a ruling on the merits before a malicious prosecution claim can succeed. I’d have to know more about the facts of this before giving a definitive answer, though. However, I do agree with the other respondents that even if you have a case, it seems like one that isn’t worth bringing.

* This answer does not constitute legal advice. I am admitted in the State of Arizona only. This advice is based on general principles of law that may or may not relate to your specific situation. Facts and laws change and these possible changes will affect the advice provided here. You should not rely on this advice alone, and nothing in these communications creates an attorney-client relationship.

Brad Denton, Mesa Business Attorney.
Re-posted from AVVO Legal Questions & Answers.