In our 30+ years of experience in commercial real estate in Austin and beyond, we have seen time and again the common mistakes tenants make with office leases. One of the biggest and most avoidable mistakes is overlooking one or more key dates contained within the lease.
Your commercial lease is a binding contract. When you as a tenant miss a key date (ie something you or the landlord must do by a certain date) you lose your right to the option in question. As tenant representatives and strategic advisors, we're here to help you avoid missteps that can cause stress and cost you money. Make sure that you benefit from being informed and proactive.
Let's take a look at some key dates hidden within your lease.
Key Lease Dates: Option to Renew and Right to Terminate
Option to Renew the Lease – Probably the most important of the key lease dates is the Option to Renew the Lease. An Option to Renew clause outlines the tenant's right to renew a lease. The key date determines when you need to notify the landlord of intent to renew. If you might want to renew your lease – don't miss this date! If you do, your landlord can legally lease the space to another tenant
Tenant's Right to Terminate the Lease – The last thing you want is to be stuck in a space that doesn't fit your needs, or unable to move into a better space because you forgot to notify the landlord of your desire to terminate. The Right to Terminate is an important tenant's right included in your commercial or industrial lease.
Other Important Dates to Be Aware Of
Notice of Tenant's Right to Expand – If included, the Right to Expand clause gives you the option to add additional space to the rented premises within the landlord's property. The clause should include term limits, basic rent, contract-specific restraints, if any, on the tenant's right to expand, and most importantly, the date by which you must give notice of your intent to expand.
Notice of Tenant's Right to Downsize – This is essentially the flipside of the Right to Expand. The Right to Downsizeclause allows a tenant to reduce the amount of space rented under the lease without having to sign a new contract. Read your lease thoroughly to check for the existence of this right, its terms, and the required notification date. In short, missing any key dates will void your rights as a tenant under the lease. Unfortunately missing a date also gives the landlord better leverage for negotiation. That means they have more freedom to increase the rent, tack on expenses, or change the lease term to something poteneitally too long or too short for your needs.
Protect Your Rights: Don't Miss any Key Dates!
Landlords are not out to get you – but they have their own businesses to run and this may leave you out of luck if they have other plans for your office space. You may get passed over for a client who is willing to pay a higher rent or which the landlord feels would add prestige to the building. We know that business owners are focused on core business tasks, and keeping up with the office lease may not be at front of mind. However, preserving your negotiating chips is extremely important in a high demand economy and a tight real estate market. Here's how you can protect your lease rights:
- If possible, conduct an annual review of your lease to assess how it aligns with current business needs.
- Set reminders on your office calendar for upcoming key dates, and make plans to contact your landlord.
- Assign management of key days to an admin or another employee. Creating accountability around the subject will ensure you don't drop the ball on any important deadlines.
- Let Tower help you! We can send you email notifications of upcoming notice dates in a timely manner. We will also advise you on negotiating any of the options with your landlord. As tenant focused agents, this is just one of the services we provide at no additional cost.
Feel free to contact us with any questions or to schedule a lease audit for important notice dates.