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Commercial Real Estate Leases 101

Posted on in Real Estate Law

Will County real estate lawyer, commercial real estate leasesJOLIET AND WILL COUNTY COMMERCIAL REAL ESTATE ATTORNEYS


When most people think of real estate, the first thought is residential estates such as houses or apartments. While this is a very large percentage of real estate transactions, there is the far less seen—but also large market—of commercial real estate.

Commercial real estate is real estate for businesses and is usually considered office space, business storage, or a building/strip mall where you can put your commercial enterprise. The commercial real estate market is far less standardized than residential real estate so the potential upside and downside of commercial real estate is far greater than residential.

It can be difficult to know what commercial real estate is even available to rent, let alone standardize a lease. This can be dangerous for land lords because they do not know if the business entity they are leasing to is good for the money and they may be left unable to collect rent if the business goes in solvent. On the reverse, many land lords use the current market to try and trap unsuspecting renters into dangerous leases.



Asset Protection

When one thinks about commercial real estate, or partaking in a business activity generally, asset protection should be at the forefront of one’s mind. As mentioned, commercial real estate is not as standardized as residential, and as such lacks much of the protections afforded residential real estate owners under the law.

If a commercial real estate transaction goes awry, then the renter could be liable and his or her personal assets could be at risk. An Asset Protection Plan is the employment of legal and financial strategies that spot potential risks for the renter and work out the best way to minimize those risks going forward. Most long term commercial real estate renters have Asset Protection Plans and recognize their value.

Because of this, the attorneys at Robertson Legal Group, LLC always recommend having an Asset Protection Plan drafted before the acquisition of commercial real estate so that our clients know 1.) what the potential liabilities of their commercial real estate transactions are as well as 2.) knowing that they have done all that they can to keep their personal assets safe.

In many instances, unprotected individuals have lost their savings and even their homes due to the failure of their commercial business. We consider protecting ones home with an Asset Protection Plan to be the bare minimum if one is to go forward with a lease for commercial real estate.

Attorney Sean Robertson has over a decade of Estate Planning, Real Estate, and Asset Protection experience and works with his clients to set up a plan individualized for them that best protects them in their unique business dealings.

What is a Guarantor?

Often found in commercial leases is a clause for a guarantor. A guarantor is an entity or individual (usually an individual) that will make good on promise to the commercial landlord if the entity occupying the space is unable to fulfill that promise. In short, a guarantor is not dissimilar to a cosigner on a loan.

Since the real estate collapse in 2008, the landlord requiring a personal guarantor for a commercial lease is all but a certainty. In the current market, safe renting has become the default and most renters will require a personal guarantor if faced with a small business with little or no track record of profit.

The sad reality is that many small businesses do not succeed as originally planned and the commercial landlord requires a personal guarantor in the event the business tenant becomes insolvent. Not only can a landlord use a personal guarantor to collect moneys, but they can also be used to guarantee attorney’s fees and court costs in the event a dispute arises. From a landlord’s perspective, a personal guarantor is simply good business sense and having a well drafted commercial lease can put them in a much safer position.

That is not to say that all Guarantor clauses are beneficial or even ethical. Because the industry has no standardization, commercial leases can vary so wildly. Hence, it is not uncommon for unscrupulous land lords to put personal guarantees in their leases that are intentionally vague is not outright predatory in nature. It is crucial that a business owner has an attorney review these guarantees before they enter into a commercial lease.

An experienced attorney will know what language in a commercial lease a business owner should look out for and will work with both the landlord and the potential renter to create a commercial lease that is in the best interests of both parties.



In conclusion, Sean Robertson and Robertson Legal Group, LLC concentrate in representing small business owners and closely-held business owners with regards to their corporate and commercial real estate lease matters. Robertson Legal Group, LLC regularly works with restaurants, franchise owners, and small to medium sized business owners with regards to their corporate and LLC business legal needs including the negotiation and drafting of commercial real estate leases in the downtown Joliet and South Naperville, Illinois areas.

Our South Naperville location is near Aurora, Oswego, Yorkville, Bolingbrook, Romeoville, Plainfield, Darien, Lisle, Crest Hill, Montgomery, and Sugar Grove. We can be reached in South Naperville at 630-780-1034. Our website is Contact our skilled Will County real estate lawyers today.


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