Modifying a Commercial Lease

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By Rochford Law Posted on December 21, 2020 at 7:00 AM

A commercial real estate attorney will help you to get the most from your lease at the outset of the agreement. There are a series of stipulations that can be negotiated — particularly for commercial leases — that will have a large impact on how you run your business.

Things change over time. Your business could experience rapid growth beyond what was projected before signing your lease. The neighborhood itself could see some sweeping changes that affect your business.

So what do you do if you find yourself in an unforeseen place that isn’t reflected in your lease? These agreements are signed and sealed, holding each party to their initial agreements for potentially long periods of time.

Many people don’t realize this, but these agreements are not set in stone. There is always room for negotiation — particularly with some help from a commercial real estate attorney — to find a lease agreement that best fits your situation.

But what does this mean? How can it be done?

What Can Be Amended in a Commercial Lease

Modifying a commercial lease doesn’t mean you are completely scrapping the original lease and starting over. Many of the original stipulations will continue to be included along with the requested changes.

This is why it’s referred to as an amended lease. It’s not completely changed, there are just a few amendments to the verbiage.

So what types of amendments can be made to a commercial lease?

Term of Lease

This is the most common type of amendment to a commercial lease. It is frequently used to extend the terms of a lease.

Commercial businesses put a lot of work into their space — it’s not easy for them to simply pack up and move to a new location.

Extending a lease simply rolls the current terms over into a longer period of time. 

Expansion Into Surrounding Areas

Commercial properties often offer multiple properties within a singular building. And as these spaces move between current tenants and vacancies, an opportunity can arise for a singular business to take over an adjacent space.

An amendment can be made to reflect the expansion of a business into surrounding spaces. Conversely, a business that finds it doesn't need as much space as it originally thought can modify their lease to reflect a reduction in size.

Modifications of Leased Space

Your needs will change over time, as will your taste. It’s not uncommon for a business owner to want to make some changes to their leased space, especially if they’ve been there for a while.

This could include circumstances like wanting to paint the walls a different color, rewiring new outlets, or building out new features.

An amendment can be made to allow these changes as well as stipulate who is to pay for them.

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Assorted Aspects of Original Lease

The original lease is going to have a series of stipulations originally negotiated by your commercial real estate attorney. As we’ve discussed, your needs can change over time, which might make some of these stipulations a little outdated.

Here is a list of potential aspects of the original lease that might be amended over time:

  • Requirements for insurance coverage by either the owner or the tenant
  • Agreements over who pays certain utilities
  • Common area maintenance
  • Lease payment late fees
  • Landlord address for lease payments

These aren’t the only aspects of a lease that have the potential to be amended, but they do a good job of illustrating the types of changes that can be made.

Negotiating the Specifics

Much like the initial lease negotiations, these discussions will be a back and forth between the tenant and the landlord. Each party is going to want to find an amicable solution to keep everyone happy, but they are also going to want to keep their own interests at heart.

A commercial real estate attorney will know what type of amendments are possible, what is reasonable, and how to best frame these discussions to get you the modifications you need.

Entering the Changes Into the Record

A commercial real estate attorney will help to put together the new document. However, the signatures are what is actually going to make the lease a legally-binding document.

The tenant and landlord are going to need to sign the lease in the presence of a notary.

The Role of a Commercial Real Estate Attorney

A commercial lease should protect both the landlord as well as the tenant. At the same time, it should give the tenant everything they need for continued success. After all, a successful business is likely to stay in its current location for a long time, which ultimately benefits the building owners.

A commercial real estate attorney can help to facilitate these discussions to make sure everything is done correctly, and is fair to everyone involved.

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Topics: Commercial Real Estate, Nashville Real Estate, Nashville Real Estate Attorney, Real Estate, Real Estate Lawyer