New York Commercial Lease Attorney
The commercial lease is often the single most important factor in determining the viability and value of a business. This is often especially true for retail enterprises. It is critical to give serious consideration to the drafting and interpretation of the lease at the start of any venture, because the future ability to sell a company profitably, or at all, can depend on the nature and assignability of this vital document. Generally, the less attractive the lease terms, the lower the price of sale.
Similarly, a properly drafted long-term lease, with favorable terms and rent, can beef up the ultimate selling price of a company when the owner is ready to exit.
Aside from these future considerations, a disadvantageous leasing arrangement can significantly impact company profits for the worse. Consequently, you will want to give special attention to negotiating all lease transactions, and have each relationship properly documented by an experienced New York commercial lease attorney.
New York City is one of the most challenging rental markets in the country for commercial tenants to successfully navigate. Here are some important guidelines to keep in mind. They are applicable to small company owners, professional firms and entrepreneurs seeking to lease retail locations, offices or factory space. A number of these principles are directly relevant to those who are starting a brand new business, or buying.
Five Key Legal Considerations Before You Sign a Commercial Lease in New York City
Pay as much attention to the landlord as you do to the lease. Remember that you are leasing from an individual, and different landlords will vary in their approach to dealing with tenants. You should give careful consideration to the reputation of both the landlord and the building management company, if there is one.
A good real estate broker or consultant will know a lot about particular landlords and building managers, and can be an invaluable source of advice about whom to deal with, or not. If the landlord has a history of problem relationships with tenants, or is financially unstable, beware. You are likely to have numerous problems that can interfere with the success of your enterprise.
The seller knows something you don't. If you are buying a business and/or assuming a commercial lease, it is prudent to carefully evaluate exactly why the seller/tenant wants out. For example, if the seller is aware of plans for a new shopping complex that can adversely affect traffic to the location, he or she may be in a hurry to dump it on an unsuspecting purchaser.
Or, perhaps there are certain changes to local ordinances the seller or tenant knows of, but is tight-lipped about. The answer to this problem is to retain experienced real estate legal counsel and consultants who can help you uncover relevant facts and make better decisions. Hire those who can ask the questions you might never think of.
Also, talk to tenants. Introduce yourself to other tenants at the site where you are considering renting. Be friendly. Tell them about your business. Then casually ask, Is there anything you would have liked to have known in advance before you decided to locate your business here? See what they say. You may be surprised.
- Are there unaddressed regulatory issues? Today there are innumerable compliance matters that arise for many types of business. For instance, are you signing a lease for space that complies with environmental laws, and OSHA requirements? Does the site meet zoning requirements? The legal landscape affecting these matters can shift and change, meaning that what was lawful before isn't necessarily so now. This is something to explore in detail with your lawyer.
Look at the lease first. A great deal of work goes into investigating the specifics of a deal when you buy a business. Due diligence costs money it is definitely worthwhile, yet frequently involves a significant amount of time, effort and money. Therefore, its a good idea to examine the lease early on in the process, since it makes no sense to continue if its provisions cant support an enterprise in a favorable manner.
This guideline is also important if you are starting a business. Before you begin, look carefully at local rents, terms and landlords. These are crucial to your success. Often, they are not given sufficient consideration. If you cant find a suitable location, at an affordable rate, for a long enough term, with a landlord you can comfortably live with, go back to the drawing board.
Pay close attention to sublease and lease assignment provisions. The ability to sublease or assign the lease is often more important than most business owners realize. First, if the business doesn't make it, it gives you a way out without being on the hook for the balance of the lease payments.
If the premises are large enough, you may also want to negotiate for the right to sublease part of the space to a compatible business or to create a partnership. That can help to reduce your rental expense, and for a retail location, may be a source of additional traffic to your store or showroom.
These are just a few of the more critical aspects of obtaining an acceptable commercial lease. There are, of course, many other essential points to be carefully assessed, including asset transfer, franchising issues and avoiding liability. Hiring the right expertise to assist you is often the difference between success and failure. Choose wisely.
If you need help with commercial leasing legal issues, please contact the Law Office of Rubin Ferziger today at 212-490-8585.