Commercial Leasing in Maryland
Leasing commercial property is an important component of any business' operation. In a lease agreement, there are restrictions, obligations, and rights regarding occupancy of the premises. Making sure the terms and conditions are structured in your favor is critical. You need to ensure that you enter into the right type of lease agreement and that your interests are properly protected.
At Horowitz Law Group, we understand the complexities of commercial leasing, and we will be at your side, providing critical insight and representation.
Types of Commercial Leases
There are various ways of structuring rent payments in commercial leases, and the following are some of the most common.
Net Leases
Net leases can take many different forms, but the basic premise is that the tenant pays a fixed amount in rent and is also responsible for paying for some or all of utilities, insurance, and maintenance. Rent is less expensive than full-service leases, but the overall occupancy expense can vary month to month and is not fixed like the rent in a full-service lease.
Full-Service Leases
In a full-service lease, the tenant pays a certain amount of rent, and the landlord is responsible for paying all expenses of the property, including repairs, maintenance, taxes, insurance, and utilities.
Percentage Rent Leases
With percentage rent, the tenant's success has immediate benefit to both the tenant and the landlord, since rent is calculated, at least in part, as a percentage of revenue. Percentage rent can be in addition to, or in place of, the base rent described above.
Tenant and Landlord Considerations
Three Things Tenants Should Consider
- Suitability to the Tenant's Needs. Before renting a space, you should make sure the space is suited for your needs. Does it offer adequate parking? Is there enough storage? What are the other uses of the building?
- Who is Responsible for Improvements? It is important to be clear as to which party is responsible when improvements, such as painting and maintenance, need to be completed.
- Insurance Coverage. Even if the landlord carries insurance, you will need to carry your own as well. Finding an insurance agent knowledgeable in this area will help you make sure you and your business are protected against liability and other lease-related issues.
Three Things Landlords Should Consider
When leasing commercial space in your single-use or mixed-use properties, there are certain matters that you should take into consideration.
- Type of Lease Needed. It is important to have an understanding of the different types of leases and determine which works best for your situation.
- Rent Needed. Be sure to research the rates being charged for rentals similar to yours in your area.
- Insurance: Any form of lease you use should outline the parties' obligations for the insurance coverage on the leased premises and the building. Check with your insurance provider to make sure you've covered all your bases.
There are numerous other issues to consider, including what happens if either party needs to get out of the lease. At Horowitz Law Group, we have a wealth of relevant experience and will advise you on all related matters as we draft, review, and negotiate leases on your behalf.
What Can Horowitz Law Group Do For You?
Unlike residential leases, commercial leases are not one-size-fits-all, and they will vary based on industry, property, and the parties.
Some of the major benefits you will receive by retaining a commercial leasing lawyer include:
- Ensuring that the lease accurately aligns with the letter of intent, which should be signed by the parties early in the process to establish rent and other payment obligations, lease duration, termination terms, square footage and more.
- Clarifying responsibilities as to things like security, parking lot maintenance, lighting, electricity and more.
- Negotiating fair and reasonable default provisions and termination clauses, such as a termination in the event the business fails or one party needs to get out of the lease sooner than anticipated.
- Developing a tailored approach to matters relating to transfers and assignments of a party's interest.
- Drafting, reviewing and revising leases to ensure they adequately protect your interests, including with regard to matters pertaining to the responsibilities of the parties, maintenance costs, taxes, security deposits, exclusivity rights, restrictive covenants and more.
It is important to keep in mind that commercial real estate leases are negotiable and if properly crafted can save you a lot in terms of time, money, and stress. Retaining a lawyer to represent your interests in these negotiations is your best means to a fair and profitable lease agreement.