before your lease is signed
Introducing . . . Ziva Lease Review
Even though commercial leases are common, they are usually complex, and many businesses sign them without fully understanding what they are agreeing to. Tenants sometimes discover months or years later that there were problems with the lease they were totally unprepared for.
Because we have drafted and negotiated hundreds of commercial leases, we understand what to look for and how to avoid common pitfalls for tenants. We can also help you negotiate problem clauses in your lease to make them more favorable.
Ziva Lease Review is our unique lease review system that helps you:
- Understand your lease
- Identify issues tailored to your business needs
- Find errors, hidden costs, and unreasonable terms
- Develop a negotiating strategy that will save you time, money, and aggravation
More about Ziva Lease Review . . .
Why You Need an Attorney to Review Your Commercial Lease
Commercial lease documents are long and complicated.
They are often loaded with legal jargon. Commercial leases are filled with terms of art that have a specific legal meaning that differs from the way they are used in everyday language. We speak the language of commercial leasing and can help translate and walk you through the complicated lease document.
Commercial leases are very different from residential leases.
The legal system is generally much more protective of residential tenants than it is of commercial tenants. While Hawaii's Residential Landlord-Tenant Code governs residential leases, no equivalent statutory law governs commercial leases. Almost all of your rights and responsibilities will be established by the terms set forth in your lease. Therefore, negotiating the terms of your lease before you sign is critical.
Commercial leases heavily favor the landlord.
Because commercial leases are usually drafted by the landlord, their terms almost always favor the landlord. Contrary to what some landlords and landlord agents say, there is no such thing as a “standard” commercial lease. Just because you are a tenant, it does not mean you have no bargaining power. Commercial leases are negotiable, although the leverage you have in any lease negotiation depends on many factors. You may be able to negotiate key provisions to be more in your favor if you know what to look for and how to phrase your request for changes.
Do I need an attorney if I’m using a real estate agent?
This is one of our most frequently asked questions. The answer is “Yes!”. Real estate agents are a valuable resource because they know the commercial leasing market and can help find a space that fits your needs. Attorneys provide valuable advice on the legal aspects of your lease to help manage risk for your business. It’s great to have both a real estate agent and an attorney in your corner as you negotiate a commercial lease to make sure all your bases are covered.
Dangers of Signing a Commercial Lease Without an Attorney Review
We get it. When financial resources are limited, it is tempting for businesses to skip hiring an attorney to perform a comprehensive lease review. However, numerous legal risks and business liabilities can arise in commercial leases for retail, office, and industrial space. Failing to have your lease reviewed by an attorney comes with substantial risks:
Financial Threat to your Business
The financial commitments in the lease may be more than you can afford because you didn’t realize that the lease obligated you to more than just the base rent.
Financial Risk to your personal assets
You may not realize the extent to which your personal assets are at risk because you signed a personal guaranty of the lease with unreasonable or overbroad provisions.
You may discover the lease you signed contains terms that unreasonably expose your business to potential legal liability or significantly limits the landlord's responsibility.
Trying to cut the relatively low cost of a lease review up front could end up costing your business more in the long-run. A Ziva Lease Review will help protect you and your business against financial risk and liability exposure.
What Is a Ziva Lease Review and How Does It Work?
All Commercial Lease Reviews Are Not Created Equal.
Every attorney has a different approach to commercial lease reviews. Our approach at Ziva Law is to understand your business, to review the lease thoroughly and consistently to identify mistakes, hidden costs, and high-risk clauses, and evaluate the agreement for reasonableness. Our goal is to explain this information simply and clearly, so you will have less stress in understanding and negotiating your lease. Because we regularly draft, review, and negotiate commercial leases, and we understand both landlord and tenant perspectives, we know what provisions are worth fighting for.
We offer packages of Ziva Lease Review services that allow you to decide how involved you want us to be. We review your lease, provide you with recommendations, and collaborate with you to either lend guidance so you can negotiate the lease on your own (or with your real estate agent) or have us draft and/or negotiate lease revisions on your behalf.
With the knowledge you gain from your Ziva Lease Review, you will have several options:
You may sign the lease “as is.”
If you do so, you will have still have benefitted from the lease review because you are now making a fully-informed decision and can have peace of mind knowing you understand what you are getting into.
You may negotiate some key terms of the lease on your own or with the assistance of your real estate agent.
Equipped with the enhanced understanding of your lease and the recommendations of your attorney, you will be in a better position to negotiate with the landlord.
You may have your Ziva Law attorney draft and/or negotiate the lease terms.
This frees up your time for you to focus on your business. Even if you can negotiate your own lease, it is not always the best use of your valuable time. We do the work, so you don’t have to.
You may decide that the lease has too many problems and that it is too risky for your business.
If so, a lease review could save you from making a terrible business move. You can find a lease that is a better fit for your business.
No matter what you decide, when it comes to having a commercial lease reviewed by an attorney, your business will benefit from a Ziva Lease Review.
What Does Your Lease Really Cost?
Lease rent is often the largest fixed expense for small and mid-sized businesses. During an entire lease term, the total cost of your lease (including base rent, common area maintenance expenses, and other costs) can easily total hundreds of thousands of dollars.
For example, a 2,500 square foot retail space with a monthly base rent of $5.00 per square foot and common area maintenance (CAM) expense of $1.50 per square foot over a 5-year term with 3% annual increases amounts to a total lease cost of $1,035,281.48. That's right, it's over a million dollars! This does not even include taxes, insurance, fees, build-out costs, and other expenses commonly tenant’s responsibility under commercial leases.
If you were going to spend this much on anything, wouldn’t it make sense to invest in due diligence before deciding whether to buy?
Use our total lease cost calculator to discover approximately how much your lease really costs. The calculator does not account for annual rent increases, which is common in commercial leases, but will give you a rough estimate of how much your lease really costs. This tool can help you decide whether it is worthwhile to invest in a lease review to help you manage the risks inherent in commercial leases.