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Do you need a commercial real estate lawyer for your lease transaction?

Choosing your commercial real estate lawyer before the transaction is the key to success.

Choosing the right commercial real estate lawyer for your transaction involves a lot of factors. A wise client will ask about the lawyer’s commercial real estate transaction experience and the costs of the lawyer’s services. This should be done BEFORE the commercial real estate lease contract has been signed. The time to negotiate and ask questions about the commercial lease terms and agreement is before you sign!

Commercial Real Estate Transaction Experience

The commercial real estate lawyer should have lots of experience and focus on your particular business space, so he or she can advocate for you and protect your interests. The lawyer needs to be familiar with the type of property (the “asset”) class and the client base. A retail client will have different needs than someone purchasing raw land or leasing an office or industrial space.

Ask what kind of experience the attorney has in reviewing and drafting documentation, like commercial office leases or triple net leases. Find out what percentage of their practice is commercial real estate leasing. You don’t want someone who lists this as one bullet point among many- commercial real estate is complex and evolving, and a general practice law firm won’t have the experience necessary to negotiate in your best interest.

How many commercial real estate leases has the attorney negotiated? You want someone with enough experience to make sure you’re not leaving anything on the table at negotiation, and who can give you an unbiased view of the deal. The deal must be evaluated for risk appetite from a financial and legal perspective.

Commercial Real Estate Lawyer Costs

Contact your commercial real estate lawyer BEFORE you sign!!

Don’t try to save money by using a family or friend’s lawyer or Google to help you negotiate your lease. The intricacies of commercial real estate leasing and negotiations are not taught in law school. Only a commercial real estate lawyer, practice and experience, will be advocate for your interests. A web search will not substitute for a lack of knowledge. Commercial real estate is a complex and expensive transaction, and it’s worth it to invest in a knowledgeable lawyer.

Hopefully, the commercial lease transaction goes smoothly. The real estate lawyer will be working behind the scenes with Landlord’s representatives and brokers to secure your legal assets and your peace of mind. A real estate broker can’t provide legal advice, and the more complex the deal, the more legal items there will be. The broker is only paid if the transaction is completed, but the commercial real estate lawyer will advocate for your interests first.

Your Commercial Lease Transaction Is Unique

The commercial lease agreement is Landlord’s first offer, not an agreement uniquely tailored to your specific business. The commercial lease terms need to reflect the exact agreement between the Landlord and the Tenant. A good commercial real estate lawyer will take you through the lease document and explain the risk and reward of the negotiated lease agreement to you.

This article does not create an attorney-client relationship. This article is for general education purposes only and is not legal advice. You should consult with a qualified attorney before you rely on this information.

The Default

Sometimes Landlord or Tenant, either inadvertently or deliberately, don’t abide by the terms of the commercial real estate lease, resulting in a breach. A breach, if not cured (fixed), can create an event of default. If there is a default, then the damaged party can seek remedy. Landlord remedies could be everything from hefty financial penalties to lockout to termination of the lease and suing for the monetary balance. If Tenant has any default rights, they are often limited to actual damages or specific performance.

The Notice

It’s not fair to have consequences without knowing what the action is, right? That’s why notice is important. The defaulting party should be informed of default by the damaged party, so the offending party can take action to fix it- this is notice.

The commercial real estate lease should clearly state Landlord and Tenant’s address for notice. Negotiation tip: don’t make the premises Tenant’s sole notice address. If Tenant is locked out or doesn’t otherwise receive mail at the space, then notice may be legally delivered, but not actually received!

Notice can be delivered in different ways:

– By hand

– By email

– By mail (US Mail, certified, or registered)

– By courier service

Notice should always be required to be in writing; it’s hard to prove a phone call occurred in court. Certified mail or courier service are often the most reliable ways to document that delivery occurred, and it’s important to understand the entire notice provision to confirm when the clock starts ticking on any cure period in the event a notice of default is received.

The Cure

Once the damaged party has provided notice, there should be some time for the offending party to fix the damage, known as the cure period. That’s not always the case! In an improperly negotiated commercial real estate lease, Landlord can theoretically tell Tenant that Tenant is doing something wrong (even if it’s easy to fix), then default Tenant and immediately pursue its remedy. That’s default without a cure period!

Each party to the commercial real estate lease has an incentive to make sure that defaults are remedied as quickly as possible- Tenant wants a safe place for its employees and customers to enter into business transactions, and Landlord wants to make sure that Tenant is paying its rent. Both parties enter the lease expecting the other to abide by the agreement, but if there is a breach, it does take a little time to fix the problem.

With a notice and cure period, Tenant has to be told something is wrong AND has an opportunity to remedy the default. Negotiation tip: Non-monetary defaults usually need more time to cure than a monetary one. State the exact amount of days for cure that each default has in the commercial real estate lease.


Disclaimer:

This article does not create an attorney-client relationship. This article is for general education purposes only and is not legal advice. You should consult with a qualified attorney before you rely on this information.