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Lease Negotiation Tip #1 – The Use Clause
Most commercial leases contain a use clause. The use clause is a provision that states the purpose for which the tenant may use the leased space. This clause can range from very general to very specific. For example, a common general use clause will state, “The Premises may be used for any legal purpose.” A more specific use clause provision may read, for example, “The Premises shall be used for the operation of a salon providing hair care and aesthetician services. The Premises shall not be used for the retail sale of any beauty and/or hair care products, except that Tenant may utilize space in the front of the salon, not to exceed an area of 25 square feet, for the sale of the products of Tenant’s choice.”
When negotiating your commercial lease, be sure that you make the use clause as general and vague as possible. This allows you flexibility in the products and services you provide as your business grows.
In each of the next several blog posts, we will present to you a suggestion for you to employ when negotiating a commercial lease. These posts will cover renewals, the Use clause, the Assignment clause, CAM (Common Area Maintenance) and lease options. For the vast majority of tenants, these items are of critical importance when establishing rights under a commercial lease. Through our years of experience, we have found that these areas, when handled improperly, can detrimentally impact a business’ bottom line to the point of causing a complete business failure. Since we’re in the business of helping small businesses succeed, we are glad to provide advice on how to strengthen these areas in your lease so that they operate in your favor.
As we move through the various topics of discussion, feel free to pose any questions or share any experiences – positive or negative – that you have had in relation to the subject.