Real Property Leasing Basics
Property used for business is generally leased. The owner (landlord) will usually present the prospective tenant with a "form" lease that may be as old as 1997. Leases are just like any other contract and must be carefully read before it is signed. There may be points that the tenant does not agree with and others that are not in plain English.
There are no standard leases. Forms by the American Industrial Real Estate Association come in various types. Many are "gross" leases where the tenant pays rent, property tax, maintenance and insurance for the building. Others contain language of waiver of code sections 1941 and 1942, which waive (the tenant gives up on) statutory obligations on the owner to repair the building, and that allow the tenant to make the repairs and deduct them (subject to limitations) from the rent.
An inspection of the property is a must. Not just one inspection but several, and certainly turn on the lights, flush the toilets, turn on the heater and a/c and be sure the roof does not leak, and that these facilities work. There should also be a "legal" inspection to be sure the zoning allows the use the parties want to make of the property and that there are no noise or other abatement laws that will prevent use of the building as intended.
Many leases are negotiable, but many of the provisions are not easily understood. Use competent legal counsel to review a lease before signing up and committing to long term commitments. If you are the owner, be sure to use a modern lease with valid clauses. The law changes frequently and older leases may contain language the owner wants but is not enforceable.
An owner also needs to be aware that in these changing economic times, rent reductions may require rent shifting, notices to lenders, revising Estoppel Certificates and planning.