20 Jul Recent Eviction of Spectacles Detroit is a Reminder of the Importance of a Detailed Written Lease

The eviction of Spectacles Detroit, which had been in business for over 30 years, is a reminder to businesses and landlords alike that a carefully negotiated written lease is imperative. This is especially true at a time when there has been an increase in demand on commercial space in the City.  Leasing is a great way for new business or existing business to save money.  However, commercial leases are often lengthy and difficult to understand, with terms that are missing completely or terms that heavily favor one party.  More and more, the same issues crop up in the commercial lease setting that could have been avoided at the outset.  In negotiating the build out of the space, the parties should determine who will pay for what, whether it will be recouped by that party over the course of time and what will happen on the termination of the lease.  It is also important to consider whether the tenant will have the opportunity to extend the lease at the end of the initial lease term. This is an especially important consideration for the tenant who has spent significant resources in the build out of the space and has dedicated time and energy to build its reputation within a community. If the lease can be extended at the end of the term, the parties should identify whether the rent will increase. If so, how the terms of increase will be determined.

The parties should make sure to identify each party’s obligations with respect to the maintenance and repairs of the property and what happens if the maintenance and repairs are inadequate.  Will the landlord be responsible for any interruptions to the commercial tenant’s business or is that a risk the tenant assumes? Along these same lines, indemnity and insurance provisions should be closely reviewed. Are you being asked to hold harmless the other party for their own misconduct or failure to perform under the lease? These broadly drawn provisions can result in an unfair outcome and cause significant loss. If you have questions or concerns, it is wise to consult with an attorney who can help you negotiate the terms and also explain their meaning.