When signing a commercial lease, a "right to relocate" clause may strike you as odd, or even a bit unfair. Is such a clause even enforceable?
Generally speaking, "right to relocate" clauses in commercial leases are legally valid, but there are certain things business owners can do to protect themselves when reviewing and negotiating a lease, and in situations when a landlord uses the clause to force you to relocate.
Here's what business owners need to know:
What Is a 'Right to Relocate'?
A "right to relocate" clause is often found in retail leases. This clause allows the landlord to relocate a tenant per his, her, or the company's discretion. Right to relocate clauses give landlords more control over their property. For example, landlords may need to relocate a tenant during an expansion of the property or to accommodate the needs of another tenant who wants to lease a large amount of space, according to the American Bar Association.
However, having a "right to relocate" clause in a lease doesn't mean that the landlord can terminate the lease and kick you out permanently. Usually, the landlord will move a business to another available space on the property or to another similar space.
What to Look for in Your Lease?
Commercial leases are one of the most important things business owners sign when securing a business location. So before you sign a commercial lease, here's what to look for in terms of "right to relocate" clauses:
- Landlord pays the costs. If it doesn't outright say it in the contract, make sure to negotiate with the landlord so he or she is responsible for paying all the costs associated with a potential relocation. These costs may include basic moving costs to updating stationary and marketing material.
- New place is comparable with the old. Make sure that the clause puts you in a new space that's at least the same size and configuration as your original rental space.
- Option to cancel. Check to see if the contract gives you the option to void the lease if the landlord relocates you to a smaller or subpar space.
Since signing a commercial lease is a big deal, and relocating can affect your business if it's in an undesirable location, you might want to call up an experienced landlord-tenant lawyer to help you parse through the lease agreement and to negotiate better terms for your small business.
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