Many businesses in Pennsylvania operate from leased premises, especially new business start-ups. As a business owner, whether you are just starting your business or looking to expand your business to bigger or better facilities, you should carefully consider all aspects of a commercial lease agreement before signing. These are some of the terms you can expect to see in commercial leases in Pennsylvania:
- Duration – A commercial lease agreement may be short-term or long-term, but it will have a definite duration. The lease may provide an option for extending the duration of the lease in the future.
- Rent & Rent Increases – The lease may state the current rental amount in gross, most often on a per year basis, with a corresponding monthly amount. Many commercial leases also contain provisions for yearly rent increases. The increases may be based on a predetermined percentage over the initial rent amount, or may be based on an economic indicator, such as the Consumer Price Index.
- Leasehold Improvements – Business equipment and workspace requirements vary from business to business, so some changes to the premises are often required to suit a new business tenant. Leasehold improvements may be referred to as build-outs or fit-ups. The costs for making the changes to the premises may be paid by the new tenant alone, or shared by the landlord and the tenant, according to the terms of the lease agreement.
- Confession of Judgment – A holdover from Pennsylvania common law, confession of judgment clauses generally allowed a landlord’s attorney to ‘confess’ a tenant’s default in his stead, thereby allowing a court to enter judgment without giving the tenant an opportunity to be heard. Confession of judgment clauses have been abrogated by case law for the most part in residential leases, but they still carry some enforceability in commercial leases.
- Zoning – The tenant bears the burden of conducting an independent investigation of a property’s zoning status before entering into a lease agreement, particularly if the issue is not guaranteed by the landlord in the lease agreement. Be aware that not all ‘commercial’ properties are zoned for all commercial uses, so be sure to check the zoning status of the premises before you go to the trouble of negotiating the other lease terms.
Starting and growing a business can be a rewarding experience. Don’t sabotage yourself by entering into a lease that does not work for your business. Experienced legal counsel can review your lease agreement and help you avoid costly mistakes.
For assistance negotiating or reviewing a commercial lease agreement, or any other matter related to starting or managing your business, the attorneys at the Scolieri Law Group, P.C. can help. Located in western Pennsylvania, our attorneys are experienced in Pennsylvania business law and can take care of the details for you. Contact us today at (412)765-0546 or firstname.lastname@example.org.