Looking at commercial property for lease? Understand the owner’s ‘lease clauses.’

Leasing a commercial space has it’s own vocabulary, and understanding the property owner’s lease clauses is crucial to entering into a successful lease negotiation.

For starters, and if you are a corporation (or LLC) make certain your company name is used in throughout the lease, which is the part of the lease referred to as the ‘Parities.’ Otherwise, remember that any property for lease will usually refer to the landlord as the lessor, and the tenant, the lessee.

For sure, when it comes to clearly defining the ‘Parties,’ the ‘devil is in the details:’  if you are an LLC, for example, and you use your personal name, you stand the chance of being personally liable instead of your corporation.

The Premise Clause is key to clarifying what it is you’re leasing. If it’s an entire building, then it’s fine that just the street address is listed. Leasing parts of the premise? Make sure areas like storage locales, conference rooms, parking—and even a kitchen—is referenced within this clause.

Speaking of what you can-and-can’t use…

The lease’s ‘Use Clause’ will define how you intend to use the space you’re leasing: what type of business you’ll be conducting on the premises; or, it may list very specific requirements for the products you’ll be selling from the space.

For example, maybe the landlord has an agreement with other tenants that he will not lease to a businesses that would compete with other tenants—or sell products that are competitive.

What’s more, the Use Clause protects the landlord any liabilities because he leased to a company engaged in selling hazardous products, or is running an illegal operation of some sort.

Usually, an Exclusive Clause is similar to the Use Clause because the landlord makes a “promise” to a key anchor tenant. As noted on the website:

“An exclusive clause is a promise by the landlord that only you and no one else in the mall or building may engage in a particular type of business or carry a certain type of merchandise…Typically, only powerful “anchor” tenants get exclusives.”

If you’re moving your business to the Clarksville area, or even looking to start open your own business, contact us. We can help you throughout the whole lease process. And if you need housing as you set up your operations, we can help.