view of retail space

When leasing to a retail business, you need to make sure that you have done your due diligence. Our Long Island, NY commercial landlord-tenant dispute lawyers have seen many lease agreements go wrong, and sometimes it’s because no one did the proper research before signing. This is what you need to know going in.

What Does a Commercial Lease For a Retail Business Need to Include?

When you lease out a space to a retail business, you need to write out a formal agreement. This commercial lease agreement should contain all of the info needed to give both parties a clear understanding of their responsibilities and obligations. Your lease should include:

  • The names of all parties involved in the lease
  • The length of the lease term
  • Which part of the property will be leased
  • The cost of rent
  • If subletting or assigning the lease is allowed
  • Who is responsible for repairs, insurance, maintenance, utilities, and taxes

Who Pays Taxes When I Lease to a Retail Business?

This all depends on what kind of lease you choose. In a residential lease, a renter usually pays rent and utilities while a landlord handles the taxes, heat, and water. The landlord does not necessarily need to provide the same services in a commercial lease, provided that the agreement clearly outlines what the tenant will pay.

In what is referred to as a “triple net lease,” a tenant would be responsible for insurance, maintenance, and taxes. In a double net lease, they would have to handle two of the three. So it is possible to make a tenant pay taxes on the space that they rent.

Are There Special Considerations When Leasing to a Retail Business?

A retail business could face unique challenges of its own, and that means that a lease to such a tenant should contain special considerations that can help you prepare for all outcomes. A good example of this is a lease buyout option. If a retail business struggles, they may be willing to pay you a lump sum to exit the lease early. This can be more financially advantageous for them than sticking it out and hemorrhaging more money over the original lease term.

A retail business might also want to push for other clauses, like one that allows them to back out of a lease if many of the other tenants in a space have left. This is a co-tenancy clause, and if you have seen a dying mall you know when such a clause could be invoked. A retailer might also want the option to back out of a lease if they go bankrupt.

Finally, you also have to consider local zoning laws. Is a retailer even allowed to operate in this space? If not, you’re going to have to find another type of tenant.

Schedule Your Consultation

Handling such lease agreements without the help of a lawyer can be difficult. So contact David A. Gallo & Associates LLP to schedule a consultation with our team. You can tell us more about your plans and we can tell you how a lawyer can help you avoid legal trouble or procedural headaches.