Frequently Asked Questions
About Commercial Real Estate Law
- Why do I need a lease lawyer? I have a broker or realtor.
- How can I afford a lease lawyer?
- What do I do if I can’t afford my lease?
- The landlord wants me to sign a personal guarantee. Should I do it?
- There was a huge increase in my tax bill/operating expenses and I think I was overcharged. What do I do?
- What’s the most expensive part of the lease?
- The landlord offered to contribute to the cost of my construction and to provide a contractor to do it! This is a great deal, right?
- The landlord has said I could have free rent for a few months while I was doing my construction, but there were delays, and now he’s charging me rent and I’m not open! What do I do?
- What is fair market value in my option to renew my lease?
- There’s a big section labeled default in my lease. What’s that?
- What’s the most important part of the lease?
A real estate agent or broker is paid a commission by the landlord after the lease is signed, so they have a very strong interest in getting the deal done, because they don’t get paid otherwise!
Additionally, brokers aren’t attorneys and cannot practice law or give legal advice. They’re great resources for finding a location to lease and understanding the economics of a deal, but brokers should not interpret legal contracts; they aren’t trained for it like a lawyer.
A lease lawyer is hired by one party, and that is the only party that they represent and advocate for. That way, the lawyer can be candid and help the clientunderstand the risks inherent in the lease, providing situation-specific lease interpretation and information to let the business owner make a fully informed decision.
Always ask the lease lawyer for a price quote. The Law Office of Jenna Zebrowski, PLLC will offer a free, no-obligation price quote after receiving a copy of the lease to be reviewed.
We also offer blended fee structures, combining flat fees and limited-scope engagements to help business owners maximize their investment and control their costs.
Remember that investing a little bit now to understand and negotiate the lease is a lot less expensive than being stuck in a bad business deal.
The best thing to do is not sign a lease agreement that you can’t afford, but sometimes circumstances change and a tenant no longer wants to be in the space.
During negotiations, a leasing attorney can assist in negotiating termination rights or “kickout clauses” that will allow a tenant to exit a lease under certain conditions.
If you’re already in a lease without a termination right, The Law Office of Jenna Zebrowski, PLLC can still help you negotiate a lease termination. Even if you’ve received an eviction notice or been sued by your landlord, it might not be too late!
Landlords want to make sure they will get paid rent every month. If an entity goes bankrupt or doesn’t have any assets, then there’s nothing to guarantee the rent will be paid, so the landlord may require that the tenant, in his or her individual capacity, guarantee that the rent will be paid, even if the entity doesn’t have the funds.
A large company with lots of assets and a proven history of payment will have a lot more bargaining power than a brand-new company without a lot of funds. It’s a pretty common requirement, but there are ways to limit the tenant’s personal exposure, too.
Bonus content: an assumed name certificate, or a “doing business as” or DBA, is NOT a legal entity! It does not protect the tenant or insulate the client legally!
Ideally, The Law Office of Jenna Zebrowski, PLLC negotiated the lease before you got the bills and you have an audit right in your lease, where you can reconcile the landlord’s costs and the payments actually made.
If you signed the lease and don’t have an audit right, we can still discuss how you can reconcile your payments and the costs you are being charged and how to control these costs in the future.
Surprisingly, it’s not usually the rent. That’s a predictable and controlled amount. The most expensive part of the lease is usually the operating expenses (or common area maintenance, also known as CAM), because it’s treated as a catch-all category where landlord will put all of the expenses it can, from administrative, management, accounting and legal fees, to repair, replacement, maintenance, capital expenses, capital improvements, reserves and marketing funds, and even ownership and use charges!
Some of these are genuine expenses that the tenant should contribute to, but some are a way for landlord to shift its financial burden onto someone else– the tenant. If these expenses are uncontrolled, or uncapped, the landlord has less incentive to control its costs, because the cost increases can just be passed along to the tenant, who is obligated to pay them.
The estimates aren’t guarantees of the actual price, so it’s important to monitor what your charged and reconcile costs!
It could be. How much is the total estimated cost of construction? Make sure that you can afford the difference between what landlord will contribute and what the actual cost will be.
Watch out for fees the landlord may charge for approvals, construction management, and plan reviews. There could be restrictions on what the tenant allowance can be spent on, or conditions on how to collect it.
It’s important to be clear on how much the work is expected to cost overall, and the conditions for collecting the tenant allowance, including any requirements like lien releases or a window of time in which to make the request.
The bills usually have to be paid before the payment will be released, so timing is very important to monitor, as well.
It’s important to negotiate rent commencement before the lease is signed, because you won’t have a chance to do it later. If there is a period of time that is certain, such as August 15 or 6 months from the date the lease is signed, then it’s important to account for delays and contingencies, so the free rent goes toward construction time, not waiting to start construction time.
Even better, rent payment can commence upon the happening of a certain event, such as receiving a permit, getting franchisor approval, or starting to operate in the space.
It’s tough to have to pay rent on a space when the company isn’t operating, because you aren’t making money, so it’s important to have lease language that protects against unforeseen delays that affect how much free rent is available.
The answer is: it depends! The landlord has probably defined it in the lease as something like “whatever the landlord deems it to be under current market conditions.”
That basically allows the landlord to determine rent, in any way that he or she decides to do so. There’s no requirement to be reasonable or fair.
The Law Office of Jenna Zebrowski, PLLC, can require the landlord to use a reasonable, market-based standard as determined by neutral third parties before deciding what the rent increase will be, or even better, let’s get the landlord to determine what the rent increase will be before the lease is signed!
That way, the tenant will know what the price will be to stay in the space and can make an informed, budget-based decision before renewing the lease, not after, hoping it will be at some affordable rate!
The default section will state what constitutes a lease violation, such as not paying rent (a monetary violation) or not being open when required or not keeping the premises in good repair.
The landlord have to tell the tenant that there is a violation of the lease AND give the tenant time to fix the problem. If the problem can’t be fixed, then the default section contains a whole list of things the landlord can do to remedy the problem, which usually involves getting the current tenant out of the space, and then charging that tenant for all sorts of things, like the remainder of the rent due for the rest of the lease term, attorney fees, brokerage fees, unamortized expenses, repairs and alterations, and of course interest and penalties.
Interestingly enough, there are plenty of leases that leave out what happens if landlord breaches the lease! If a tenant can’t afford the lease, that’s probably why rent isn’t being paid, so it’s important to discuss this before getting behind in payments due.
The Law Office of Jenna Zebrowski, PLLC can help keep costs down and get the problem solved without going to court.
The most important part is probably not just what’s written on the pages, but what’s missing from those pages. An experienced lease lawyer will know what’s missing when reading a lease, and will also know the consequences of leaving out that language, and how it will affect the tenant.
Only proper legal training and experience will allow a lawyer reviewing and negotiating the lease to spot those missing items and understand how important they are.
Top things to look for are: expenses that the landlord should be obligated to control, but there’s not a requirement to do so; mutuality (if the landlord is limiting its liability, Tenant should also have similar limits) and repair or replacement costs that should belong to the landlord but are being passed on the tenant.