Negotiating the Start Date Provision of Your Office Lease

July 5, 2016

Practice Area: Business & Corporate Law

In negotiating an office lease, business owners should pay particularly close attention to the terms and conditions regarding the start date of their office lease.

Many landlords will begin negotiations regarding the start date of an office lease by providing an “estimated” date on which the tenant will be able to move in to the office space, stating that if the actual date on which the space becomes available is different than the estimated date, there will be no penalty to the landlord and no recourse for the tenant. Primary reasons that landlords use to justify this stance include:

  • There is an existing tenant in the space and while the existing tenant is supposed to move out by a certain date, their doing so is beyond the landlord’s control; and
  • The landlord will be performing work on the space prior to the new tenant’s arrival and while the landlord hopes and expects to complete the work by a certain date, its doing so is not fully in its control.

However, tenants should carefully consider negotiating such a stance by the landlord. Businesses are often dependent on moving into their new office space by a certain date and will suffer substantial damages if they are not able to do so. As examples, a business may be required to move out of its existing office space by a specific date or it may want to have the new space for an important occasion occurring on a specific date.

Possible compromises that the landlord and tenant might be able to reach on this issue include:

  • Having the lease provide for a specific date on which the office space will become available to the tenant, subject to the tenant not requiring the landlord to perform any substantial work on the space prior to the tenant’s arrival;
  • Having the landlord pay a penalty (possibly on a monthly basis) if the space is not available by a certain date. This option provides the landlord with some flexibility as to the date it will make the space available to the tenant while giving the tenant some comfort that the landlord will not withhold the space for too long; and
  • Giving the tenant a right to cancel the lease at no cost or penalty if the landlord has not made the space available by a certain date.

In negotiating an office lease, business owners should carefully review and negotiate the terms and conditions regarding the start date of their office lease. Doing so will help prevent the tenant from being in a situation in which it cannot move into its new office space for longer than it expected and suffering associated damages.

Please fill following information to download presentation