“Grandma, What Big Teeth You Have:” Restoration Clauses in Commercial Office Leases Can Really Bite!

Originally published by Axel Lindholm.

Experienced Business Litigation Attorney Assisting with Commercial Office Leases in Sugar Land, Texas and the Surrounding Area

Most prospective commercial office tenants endlessly pour over the financial implications of the proposed lease agreement. How much is the monthly rental? Who is responsible for utilities? What costs are associated with up-fitting the space to meet the tenant’s requirements? All too often, however, the soon-to-be tenant fails to consider some of the more innocuous paragraphs in the lease draft, particularly those that relate to the surrender of the premises. Restoration clauses – those little provisions that require the tenant to restore, at the landlord’s request, the premises back to the condition it was prior to the lease – can be as sharp as wolves’ fangs.

It is one thing to spend money to outfit an office arrangement. It is another to spend additional sums to tear it out.

Why the Worry?

Some tenants think, “Why the worry? Won’t the new tenant jump at the chance to take over the improved premises?” The answer: “Not necessarily.” Tastes in office space have radically changed in recent years. Formerly, office space was often outfitted with multiple perimeter private offices that were filled with expensive paneling and built-in shelving. The “open concept” that is the rage in residential housing has spilled over to the commercial world.

No More Corner Offices

Now, many firms want broad, open space within which special cubicle arrangements can be installed. These arrangements are particularly attractive for businesses that allow workers to work remotely on some days. A dedicated office is now often an empty office. If the tenant that follows your firm desires an open concept and if your lease contains a restoration clause, you might very well need to get out your checkbook when you vacate the premises.

What Can a Prospective Tenant Do?

There are a number of ways that prospective tenants can try to protect themselves. For example, a prospective tenant can:

• Negotiate hard to have the restoration clause removed from the lease agreement. If the landlord insists that it remain, try negotiating a maximum cost that you, the tenant, will be forced to pay at the end of the lease to restore the premises. If the landlord won’t agree, perhaps you should look for space elsewhere.
• Talk with officer outfitters and contractors to determine if there might be ways to meet your needs and achieve your own layout goals in such a way that do not require expensive tear-down at a later date. Can you be flexible in your own plans in order to avoid costs at the surrender of the premises?

Lease Negotiations Involve Complex Legal Issues

All too many businesses neglect to contact experienced legal counsel when they negotiate commercial lease space. Recognize that going it alone may be “penny wise and pound foolish.” Restoration clauses and other “innocuous” provisions can reach back to bite you later. Spending the time and the money to negotiate the best terms possible can work to your advantage. The attorneys at Romano & Sumner have more than 20 years of combined experience providing expert legal assistance to business clients. We represent clients in all types of commercial real estate transactions and we have extensive experience in litigation, if that becomes necessary. We pride ourselves not only upon our professionalism, but also upon our client service. We return phone calls within one business day. We keep clients informed. We complete the work within the allotted time frame. Call us at 281-242-0995 or complete our online contact form.

The post “Grandma, What Big Teeth You Have:” Restoration Clauses in Commercial Office Leases Can Really Bite! appeared first on Romano & Sumner – Sugar Land, TX Attorneys.

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