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| Home > Office Management >
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Back
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| Realities of a Commercial Lease |
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 Today's commercial real estate transactions are more complicated than ever. However, even with extremely complicated leases, there are still companies who are not using experienced real estate professionals and attorneys to review or negotiate their lease documents. Not keeping an eye on even the most obvious appearing language in your lease agreement can be a costly mistake.
For example, there are many dates contained in a lease document that you need to be aware of, including the commencement date, the date the premises is ready for occupancy, the date of substantial completion, and the date when rent is first paid. These dates will differ from one lease to another.
All leases will have a specified lease term. However, some do not have a specific date at which the lease commences, (example: January 1, 2000) This is important because in many leases, most other dates are triggered by the commencement date.
Make sure you are aware of which date is the commencement date, as it may differ form the move-in date, the occupancy date, or the date you take possession. The above dates may include whether you have contractors in the space or you move in furniture and equipment. A "Use and Occupancy" certificate may trigger a commencement date even though you may not be ready to occupy the space.
Also, make sure you know if the space you will be leasing is currently occupied by an existing tenant. Should that tenant "holdover" for any length of time, it will affect your move-in and/or commencement date. Make arrangements for this in the lease document.
In addition, delays in construction may affect dates in the lease. This may be caused by changes in the workletter after initial approval by both landlord and tenant, labor problems, or availability of construction materials. Changes by tenant may delay occupancy, but rent may still commence.
Tenants and landlords should be aware whenever a clause in the lease refers to a date. You should consider all dates to be critical and ensure that you understand the implications certain dates have on the overall lease transaction.
After the tenant have moved into the space, and a commencement date has been established, the landlord and tenant should execute a memorandum stating the office commencement and expiration dates.
All of the confusion can be avoided by using a competent real estate professional. This will allow both the landlord and tenant to understand their respective responsibilities and obligations.
Eric Stretch is a Sales Executive with NAI Geis Realty Group, Inc., a commercial real estate brokerage and management firm with offices in Philadelphia and Wayne, Pa.
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