Commercial Landlords: Why You Should Always Offer Full Disclosure

Moving into a new business location is an enormous step, whether it is the grand beginning (and eventual opening) for an entrepreneur or a transition as they hope for better success in another area. Finding suitable space is of the utmost importance, and a smart business owner must consider a range of details and requirements that fit their needs. This means examining the size of the building and figuring out how much upfitting will be required, taking a glimpse at nearby businesses and scoping out any immediate competition, figuring out whether there is enough parking, thinking about room to grow, researching zoning laws, and so much more.

If the commercial spot seems like it is a good spot, your prospective tenant will quickly want to move on to discussing the financial details and begin negotiating terms of the lease. Most likely, both of you will size each other up too, trying to determine whether you or not you would work well together in a landlord/tenant relationship over the years. Most commercial landlords are seeking tenants who have the finances to keep up with their rent over the long term. This is one of the most important factors, and especially if you are dealing with a new business. They may be full of ideas and enthusiasm, but short on capital or good credit, and that could mean big headaches for you later.

Full disclosure from both parties is key. As the landlord, you want to know if they have the proper business model and funds, and as the tenants, they want to know if your space is in good shape and what will be included in the deal throughout the years. As you begin negotiating a lease, rent, deposits, and how any increases are to be structured should be thoroughly outlined, as well as who covers insurance, specific building services, and more.

Maintenance issues must be discussed—along with who will be expected to do repairs on what—and if there are any current or ongoing problems with current electrical, plumbing, or mechanical systems that should all be disclosed. If there are any environmental factors that could affect the tenant and their business, they should be thoroughly informed, along with any other local issues that could affect them.

Most business owners are concerned about room for future expansion, and they may wonder if you would consider selling the site to them in the future or may even want to work out a rent to own deal. As negotiations continue, consult with an experienced real estate/business attorney like Shane Coons to create a lease that will protect you for years to come—and promote a good relationship with your tenant.

Call now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com. We will be glad to meet with you to review all your legal needs and explain your options in detail. Our office is here to help!

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Commercial Landlords: Why You Should Always Offer Full Disclosure

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