How to determine if the commercial lease I’m signing is fair?

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How to determine if the commercial lease I’m signing is fair?

I’m negotiating a lease for a retail store which has been vacant for 2 years. The landlord is giving me 3 months free on a 5-year lease with a 2 months security deposit. He said if I go out of business within the 5 years, I would have to lose my security deposit and pay back the 3 months free. is this common? If not, what is the most common “personal guarantee” or “good guy clause”?

Asked on June 19, 2012 under Real Estate Law, New York

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You need to realize that under the laws of all states in this country, the protections under a commercial lease are less than under a residential lease.

In a commercial lease, essentially anything that is negotiated between the parties is allowed. What you have written is typical with a commercial lease where some months are "no charged" as an inducement to get a tenant. However, a security deposit is used solely for repairs of a unit commercial or not and cannot be used under the law as a penalty provision if one goes out of business. be careful about a personal guarantee.

I suggest you consult with a landlord tenant attorney before you sign any such lease.

 


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