The leasing process can sometimes be very confusing so here is a brief outline of the typical process when you've found a space for your business or restaurant:
- You either call a lawyer or the leasing agent to help with drafting an Offer to Lease. An Offer to Lease is a document that includes all the main agreements between the tenant and the landlord, such as lease start date, amount of base rent (monthly fixed rent) and additional rent (landlord passing on the costs of renting to you like property taxes, snow removal, repairs and maintenance, accounting fees) or percentage of revenue rent (landlord receives a % of the revenue you make in the business), renewal options and tenant improvements. The Offer to Lease is subject to a few conditions which we would determine in order to give you the option to do your due diligence on the space before committing fully and legally to a lease. One of these subjects should always be "Subject to review of landlord's standard form lease by the Tenant's lawyer or other professional advisor". We would also pick a date for the end of the subject removal process, which means that you have until that date to decide whether you want to remove the subjects and make the Offer to Lease a binding Lease.
- You would do your due diligence on the space for the period up to the subject removal date and your lawyer would review the standard form lease to advise you of what you will be signing.
- On the subject removal date, you need to decide if you are going to remove the subjects (you want to legally bind yourself to the space) or not going to remove them (you can walk away or renegotiate).
- Once you remove subjects, then the landlord and the tenant finalize the standard form lease.
Here are some general comparisons between an Offer to Lease and a Lease:
- Offer to Lease is a starting point for documenting the agreements
- Offer to Lease comes first
- Offer to Lease has subject conditions
- Lease is much longer
- Lease should have every detail about the relationship between the tenant and landlord
- Lease replaces the Offer to Lease once signed
We would always suggest having a Lease reviewed by a lawyer to ensure that it meets your business or restaurant needs. It is better to catch the terms before you sign, than try to fix it after you've signed it. If you have a question about leases, don't hesitate to ask one of our business lawyers.