Small Business Tenants – Know Your Rights!

As the real estate market in the Bay Area continues to skyrocket, small businesses and local residents are feeling the squeeze. Here are some basic tips from commercial real estate attorneys for small business tenants on how to strengthen your lease and continue to operate in your place of business.

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  • Get it in Writing – A lease agreement is only enforceable if it’s in writing. Verbal or handshake agreements do not count in commercial real estate.
  • Read and Understand it Before you Sign it – Sounds obvious, but when presented with a “standard contract” or “standard lease,” you need to read and understand it, including the “fine print.” You are legally bound by everything in this agreement. Unlike in residential, a commercial lease governs almost all of your rights as a tenant – so make sure to understand any document you sign.
  • Negotiate, Negotiate, Negotiate – All terms are negotiable, the key is to anticipate what’s coming and to not be afraid to ask for what you want. You may be surprised by what you can get. For each clause, know the specifics: Who is responsible for What and When, and How much? Don’t be surprised by unanticipated costs!
  • Important Terms to Negotiate and Understand – Rent (When do you have to start paying? What is included in the rent, and what additional charges can Landlord pass-through to Tenant?); Term and Option to Renew/Extend (make sure you have in your lease to extend the term, and know that timing to exercise this option is critical); Condition of Premises; Improvements; Maintenance and Repairs; Right to Assign … the list goes on. Contact Legal Services for Entrepreneurs to meet with an attorney regarding your lease.

In 2014, the Lawyers’ Committee’s Legal Services for Entrepreneurs formed the Community Business Resiliency Project, made up of commercial real estate attorneys and volunteers, who provide legal counsel and negotiation assistance to small businesses on their commercial leases. To date, we have provided immediate legal counsel to over 124 small businesses, many who have been served with notices to vacate their places of business, through legal clinics and pro bono attorney matching.