After specializing in Colorado real estate laws for many years, I have seen many unfortunate situations that could have been avoided from the beginning with the help of an attorney.
If you are looking for commercial real estate for lease in Colorado, be sure to read the following article before signing a lease.
Be Wary of Commercial Real Estate Leases
Almost every week I review commercial real estate leases for office and retail tenants. As a real estate attorney, it never ceases to amaze me how one-sided these lease agreements can be.
It’s in the best interest of the property owner to put language in these agreements that favors them. They have made a significant investment and don’t want be put at a disadvantage should something go awry. But let me tell you, these agreements aren’t set in stone and you need to take action before putting pen to paper and making a multi-year commitment.
For many businesses, a lease agreement can be one of your greatest expenses, often only following payroll expenses. The difference is that you can’t fire or layoff a lease.
Many business people simply sign these one-sided agreements without taking the time to read each page or retain an attorney to review the document on their behalf. This is a terrible mistake. Many commercial real estate leases can range from 40-60 pages.
I recently reviewed a lease that gave the landlord the ability to relocate the tenant at any time during the lease term, change the method by which the landlord calculates property operating expenses, and, most astonishing, gave the landlord the ability to change any of the lease terms at any time if the project is refinanced.
"Can a landlord do all of these things?", you might ask. The answer is "absolutely," but only if the lease contains such favorable terms to the property owner.
Needless to say, I struck all of these provisions from my client's lease, along with other one-sided language. You should do the same when confronted with a commercial lease.
I recently reviewed a commercial lease agreement for a client who complained that her landlord was forcing her to share in the cost of repaving a parking lot that services all of the tenants in a retail strip center. Upon reviewing her lease, I noticed that it not only obligated her to share with other tenants in the cost of repaving the parking lot, but also in replacing the building’s roof, if this were ever deemed necessary. Typically, these are capital improvement expenses that the landlord pays for and doesn’t pass on to tenants. However, because this particular client signed the lease several years ago, the client had to share in the cost of repaving the parking lot (an additional $1,400 to her rent) even though her lease expired in eight months!
If you are looking to sign a commercial lease, I have one simple piece of advice for you--don't sign a commercial lease without thoroughly reviewing it.
If you can't afford to have an attorney review it, you should carefully review all of the language on your own. However, in reviewing the agreement on your own, you still may not completely understand some of the language in the lease.
Therefore, consider retaining an attorney. If you don't do this before signing the lease, you may need to hire an attorney later after you have signed the lease and problems arise. And that will undoubtedly cost you more than investing a couple hours with a good attorney.
Law Offices of Eric L. Nesbitt, P.C. 10375 Park Meadows Drive, Suite 100 Littleton, Colorado 80124 Phone 303-741-2354 Fax 303-346-5290 In the Denver Metro Area