What Do These NYC Commercial Lease Terms Mean?

If you are signing a commercial lease agreement for the first time, it’s important to know exactly what you are getting into. That means familiarizing yourself with some of the common commercial lease terms that you are likely to encounter when negotiating for your new rental property. A New York City commercial lease dispute lawyer can tell you more about what these common terms mean, and we can help you if you want someone to go over an agreement with you before you sign on any dotted lines.

What Are Some NYC Commercial Lease Terms I Should Know?

Not every lease is the same, but many of the agreements signed in NYC are going to use similar commercial lease terms. Some that you might hear or see include:

Fixed rent: This means that your rent raises a set amount each year, usually around two to three percent.

Fair market rent: This is calculated by considering the rent prices on similar spaces in the area. You and your landlord can negotiate over any limits to rent increases based on this number.

Operating expenses: This is how much a landlord spends to maintain and insure their building.

Base rent: You will owe a minimum amount of rent to your landlord each month, but you could owe additional rent based on other costs. Think of this as your fee for renting the space, and then your additional rent is meant to pay for things like operating expenses and building taxes.

Permitted use: This describes how your business uses the space. This can be specific like “pizza parlor” or more general like “restaurant.” In some cases, this part of your contract can also give you exclusivity, making you the only such business in a building.

Letter of credit: If you are unable to pay the security deposit for the rental yourself, a bank can guarantee that it will pay your deposit for you. This can be necessary for new businesses with little immediate cashflow, but a bank will want collateral.

Indemnification: These provisions determine who is responsible or liable for incidents that result in injury or damage.

Contingency provision: This allows you to get out of a lease early if you cannot do business in the way you originally intended.

What Should I Do If I Have Questions About Any NYC Commercial Lease Terms?

If you are unsure of any of the commercial lease terms being used, you should ask for clarification. This blog is just a primer, so you should also have a lawyer of your own with you when making deals like this. A commercial lease is often far more complicated than a lease for an apartment would be. You should not move forward with any lease agreement if you do not completely understand what you are getting into.

Talk to Our Attorneys Today

If you are negotiating a new commercial lease, you may want to contact Robert Rosenblatt & Associates. Our experienced lawyers can help you ensure that your lease agreement does not leave out anything important and that your best interests are represented.