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Avoid Pitfalls On Your Commercial Lease Agreement With These Clauses!

Many individuals sign a commercial lease agreement filled with what seems to be confusing fine print legal language without reaching a comprehensive understanding of what that print means. For some of the more fortunate people, minimal issues occur over the course of their lease and therefore pass many years without ever having to read over their agreement. However, not all commercial investors are as lucky and face unseen repercussions when issues begin to arise. To avoid pitfalls, there are various clauses to consider.

First and foremost, having a lawyer approval clause should be a clause to prioritize. This ensures that the offer is conditional upon the review and approval of the tenant’s solicitor. With the extensive knowledge of a lawyer, they know what legal terms to pinpoint and can identify any gaps that need to be filled for the tenant’s protection. Listed below are some possible clauses that a lawyer can aid in identifying.

Rent escalation clause: A circumstance that is seen rather frequently in commercial real estate transactions is the introduction of unseen additional rent that the tenant must pay. For example, if the landlord’s costs are increased, the clause will enable them to charge a tenant an escalated rental fee.

Sublease clause: Let’s say that there is an office space within the area that you are leasing that has been unused, gathering dust. The sublease clause gives a tenant the ability to turn over all or a portion of space to a subtenant. In doing so, it protects the tenant from having to pay for unused space or having to terminate the lease in the event of relocation.

Use and exclusive use clauses: The use clause outlines exactly how you are permitted to use the space provided. Usually, the clause places limits on what lines of business can take place, office hours and regulations on advertising in the lot. The exclusive use clause offers the guarantee that no other business in your industry occupies the same space as you, therefore eliminating competitors. Improvements and alterations clause: This clause explains what improvements or alterations will be required to be made to the office space before the tenant moves in and who will be responsible for the cost of those improvements.

Renewal clause: The renewal clause explains what steps you must take to renew your lease at the end of the term. In some cases, it also states that you must notify the landlord of how long you plan to stay in the space or notify the landlord in advance if you intend to vacate the space.

We can provide professional legal advice regarding your commercial lease agreement. This material is for informational purposes only and should not be relied upon as legal advice and is solely in accordance with the laws of Ontario. To book a consultation with Buzaker Law firm regarding your commercial real estate agreement, contact us at: or 905 (370) – 0484.

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