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Common disputes for commercial tenants

Location, location, location. You hear it all the time when it comes to real estate. It is no different when it comes to finding the right place to start your business. If you open up a restaurant in a spot that is impossible to reach, you could drive away your clients before you ever get a chance to open your doors.

Once you select the right place to open your new entity, you will have to negotiate a lease or purchase the property. For renters, there are several things that you will need to examine closely before you sign a lease, because they may lead to problems down the road. In this post, we discuss some of the most common reasons that disputes arise between commercial tenants and landlords. 

Who pays for modifications to the property?

This is something that might catch you off-guard if you are not closely looking at your lease. Let's say, for example, that you decide to open your new business in a strip mall that has been open for about 10 years.

The property owner may decide to make significant changes to the property. Maybe a new anchor tenant is moving in and they have to change the entire look and feel of the premises. As you can expect, this sort of remodel is very expensive.

In some cases, the property owner might try to pass along those costs to its tenants. They may expect you to pay for a portion of these changes, which is not something that most new business owners can do in the early stages of operation.

The dispute between the landlord and tenant comes down to the language in the contract, so, you should be sure to review your lease carefully with an experienced attorney before signing. It can help prevent an issue from being financially devastating in the future.

Who is responsible for upkeep of the common areas?

Outside of your store, you will have a sidewalk, some parking spaces, as well as maybe a hallway connecting you to other stores nearby. These areas are referred to as the common spaces of the business. Everyone uses them, and generally there will be information about costs of every-day maintenance included in your lease.

The thing to be aware of is what happens when these areas are also in need of repair. Maybe the parking lot outside of your store has significant holes in the pavement. Will you or your landlord have to pay to fix this?

Do you have a non-compete clause?

This is perhaps the most significant problem business owners face. Imagine starting a restaurant and becoming wildly successful. People come from hours away just to wait in line and hope they can get a table.

Now, imagine your landlord taking advantage of this opportunity. He or she could rent out space to another restaurant exactly like yours, and raise your rent so high that you have no choice but to leave your location. A non-compete clause prevents your landlord for opening a similar entity to yours and driving you out of business.

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