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The Rubinstein Law Firm Logo

For Legal Help, Call
248-220-1415

COVID-19 ANNOUNCEMENT: The Rubinstein Law Firm is dedicated to helping you with your legal needs during these challenging times. We can meet with you virtually (Skype, FaceTime, etc.), or by telephone.

What red flags should you look out for in a commercial lease?

On Behalf of | May 11, 2022 | Business Law

Before you sign a Michigan commercial lease agreement, it is crucial that you do your due diligence. Commercial leases may last much longer than most residential leases, and once you agree to lease terms, your lease is going to hold you to them for some time to come. For this reason, it is important that you comb through your commercial lease carefully and understand everything it dictates. There are also certain elements in a commercial lease that may have you thinking twice before signing it.

According to CBI Commercial, if you see any of the following appear in a commercial lease agreement, consider it a red flag.

Overly lengthy lease renewal terms

It serves your landlord well to set long lease and lease renewal terms. That way, he or she does not have to have the commercial space sit empty or spend time finding new tenants every year. In this scenario, your landlord may want you to renew the lease for several years at a time. However, this may not be in your interests, so be wary of any lease renewal clauses that have lengthy terms.

Unreasonable tax escalation provisions

A tax escalation provision asserts that your landlord maintains the right to charge you more in rent when property taxes increase. This is common, and while a tax escalation provision, by itself, should not cause you alarm, you want to make sure the escalation rate is reasonable.

You may also want to think twice before signing a commercial lease that looks too perfect or contains vague language, among other common commercial lease red flags.

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