Leases can contain many pitfalls for the unwary, and one should seek review of the lease by an attorney before the lease is signed. Whether residential or commercial, leases contain many conditions of which the potential tenant ("Lessee") should be aware.

In the past, it was common for residential leases to be on a "month-to-month" basis, and one could extricate oneself from a lease by giving a month's notice. Most leases today, both residential and commercial, are for a "term" payable in monthly installments.

You have just signed a lease to office space ("Premises") for a 3-year term ("Term"), payable in monthly installments of $1,000.00 per month ("Monthly Rent").

  • Your rent is $36,000 ("Rent") for the Term, not $1,000.00 per month.
  • If the lease is breached, terminated, or the Premises vacated prior to the end of the Term, you are responsible for the full unpaid balance of the Rent ($36,000); thus, if you vacate the Premises after only two (2) years, you will be liable for the balance of $12,000 for the Rent.
  • And, more than likely, the landlord will demand that you pay the full $12,000.00 right away under what is called an ‘acceleration clause.'
  • Let's assume that you have found someone willing to sublet the Premises for the balance of the Term.
    • Your lease may not permit you to sublet, at all; or, you may have to secure written permission from the landlord.
    • Unless the landlord is held to some sort of ‘reasonableness' standard, the landlord is under no obligation to permit you to sublet.
    • Even if you are permitted to sublet the Premises for the remainder of the Term, the lease will more than likely specify that you remain responsible for the Monthly Rent in the event that the sublessee fails to pay the landlord.

Generally prepared by the landlord or the landlord's attorneys, the lease will be weighted in favor of the landlord. By way of example:

the landlord is permitted to terminate the lease, but there will be no similar provision permitting the tenant to terminate the lease; and/or

the landlord has remedies in the event that the Lessee defaults; the Lessee tenant has no such remedies in the event that the landlord defaults.

Many landlords are willing to negotiate terms that make the lease more favorably balanced between the parties. If the landlord is unwilling to negotiate any of the lease terms, the prospective tenant still has the option not to sign the lease. Once signed, however, the lease becomes binding and the opportunity to negotiate is lost.

Business Law

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