10 Tips for a Successful Lease Negotiation

Once you have negotiated the business terms of your lease, be it for a renewal or relocation, there are a number of items to address to help you with your legal terms negotiations. Below is the list of Top 10 tips I share with my clients. While this list should not replace having a qualified, experienced, real estate attorney review your lease document, it will give you and your attorney a good idea of the subtle ways a landlord may try to take advantage of his or her tenants. (Luckily, after reading this post, you will be armed to ensure you have a fair legal document.)

1. Business terms - Double check that the business terms agreed to in the Letter of Intent are the same as in the lease document.

2. Sublease clause - Reasonable consent should not be withheld by your landlord. Your landlord will ask for 100% of profits. A 50/50 split is fair. Seek to minimize notice to your landlord and response time from your landlord. Consent shall not be necessary for purchase, sale, or merger.

3. Hold-over clause – If you occupy your space beyond the lease expiration, your landlord will ask for a penalty of 200% of the then escalated rent. However, based on my 12 years of experience negotiating commercial leases, I assure you that 150% is the fair market amount.

4. Renewal Clause – Your landlord may ask for automatic renewal if you don’t give notice. This is not acceptable. It’s nice to have ongoing rights to your own space. Negotiate the rate when possible as it will still be negotiable at that time. If the renewal rate is above market, you can still negotiate it down.