A Chicago Lawyer's Checklist for Reviewing a Commercial Lease
Having reviewed thousands of different Chicago contracts, you kind of get a sense of which way an agreement leans pretty quickly. However, if this isn’t something you do everyday, it can be overwhelming for Chicago businesses to look at 25+ pages of legalese. Here’s a few tips from an experienced contract lawyer on how to start breaking that task down into smaller parts.
How much rent is due? This should be easy, right? It should be. Unfortunately, however, leases use formulas based upon square footage or other formulas to indicate the amount of rent due. Make sure to understand the formula and I definitely recommend asking the leasing agent to explain their understanding of the formula, as well, to ensure that you are on the same page. As an experienced Chicago lawyer, I know what can happen when a tenant signs a lease they didn’t understand and it’s generally not good.
Is the lease is gross or net? The difference is important. If you aren’t familiar with commercial leases in Chicago, the difference is that under a gross lease, the tenant pays the rent and the landlord handles all the expenses (similar to a residential lease). If the lease is a net lease, then the tenant will pay the agreed upon rent plus the expenses set out in the agreement. Understanding the difference will help you understand what you will pay under the commercial lease, so you can help plan for any expenses you will be responsible for.
What condition will you receive the property? If you are taking possession “as is,” then that’s easy because you will receive the property however it is. However, a tenant in Illinois rarely wants to agree to an “as is” provision since you aren’t in a position to understand the condition of a property as well as the landlord. So make sure you receive the property in the condition you want to receive it. I.e. if you are leasing a turn-key medical facility, describe the facility and the equipment you expect to receive.
Who will maintain what? Once you know how you’ll receive the leased property, you need to ensure who has the responsibility for maintaining the leased property during the lease term. Unlike residential leases which typically run for a year, commercial leases can run for many years and the costs of maintenance can be significant. Make sure you understand what obligations will be required of the landlord and the tenant, so you can plan accordingly.
And if you ever need help from an experienced Chicago attorney with your lease, feel free to reach out to me.
