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Do You Know When Your Commercial Lease Begins?

On Behalf of | Oct 20, 2014 | Commercial Real Estate |

It may seem like such a simple question, but commercial tenants and landlords often do not know the specific date that a lease will commence. Many commercial real estate leases, whether for an office, retail or industrial space, have several conditions that must be satisfied prior to the term of the lease commencing. When those conditions do not have a time period associated with them, there may be no hard date for the term to start.

For example, one client recently called me and said, “I signed a lease several months ago, but the landlord has not delivered possession yet. Can I cancel the lease?” When we reviewed the facts in more detail, the landlord was obligated to make certain improvements to the premises prior to delivering possession. Since those improvements had not been made, the landlord was under no obligation to deliver possession. The ability of the tenant to cancel is heavily dependent upon the terms of the lease. Tenants and landlords should both take into consideration the commencement obligations, time periods for satisfaction, and potential termination rights by either party if those conditions are not timely met. Luckily for the client that called, the landlord quickly got their act together and delivered possession. Had the tenant used a commercial real estate lawyer at the outset, the pitfalls could have been avoided.

You may ask, “but wait, shouldn’t the lack of an actual or determinable commencement date invalidate the lease?” While some attorneys and practitioners would argue that the lease should be invalid, the current law in California exempts commercial leases purely for lack of a definable commencement date. Don’t get trapped by ambiguity in your lease. If you have questions about any ambiguity in your lease or your commercial lease generally, contact The Loftin Firm today.