Avoiding Red Flags with Your Commercial Property Lease

 January 3, 2022

By  Guy Gray

If you’ve created a commercial property lease, certain aspects of that lease can set off red flags for the tenant signing it. This can lead to lease adjustments (which are time consuming), delays (which affect profits) and even the potential of scaring off the tenant from signing it at all (which is bad for your bottom line). Red flags are problematic.

Let’s go over some of them and how you can adjust your verbiage to put them at ease (while protecting yourself and your portfolio).

1. Lack of Desired Clauses

Tenants like for the lease to provide protections and clauses. For example, a non-disturbance clause is extremely popular with tenants and a potential deal breaker if it’s not included, as it protects the tenant in the event of a foreclosure on the landlord’s property. Make sure to include basic protections and always include clauses that you and the tenant agree on during the negotiation phase.

2. Vague Terminology

Tenants like to understand things like charges and maintenance/repair terms. Make sure you use clear language in these cases. Here are a couple example of what we’re talking about:

  • Bad example: “Routine maintenance will be included.”
  • Good example: “Routine maintenance is the landlord’s responsibility; it will be included every six months on electrical, plumbing, HVAC and fire safety components.”

3. Unreasonable Lease Timeline

If you’re thinking you can get your tenant to move into a space that still needs repairs and maintenance, think again. Having an unrealistic timeline where tenants must move in before they (or the space) are ready is a red flag that will make them pause. Set realistic timelines when creating your commercial property lease.

4. High Turnover Rates

Now, we move on from a couple of items that aren’t on the lease itself, but can still present a red flag that prevents the tenant from signing it. First is a high turnover rate. If the tenant is aware of a high turnover rate in the space or your property, it’s a sign that there’s a problem with the location, maintenance/repairs or the landlord. Try to establish anchor tenants and keep tenants happy for retention as much as possible to avoid high turnover rates.

5. Poor Property Maintenance

Finally, the state of your property could be a red flag to prospective tenants. If the building and grounds aren’t kept up, it tells the tenant that the owner doesn’t take maintenance and repair seriously and there could be delays in any requests. Even worse, it could indicate that the landlord is financially unstable, which is never appealing. 

These are just a few examples. Want to see others and how Quarem can ensure your data and leases are correct? Request a demo today.

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About the author 

Guy Gray

Guy Gray serves as Chief Operating Officer overseeing our technology and client services teams. He is responsible for guiding Quarem application development, networking and security, as well as new client implementations.

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