The Commencement Date language in your commercial lease agreement is a particularly important detail not to be overlooked. As a tenant, you need to protect yourself against any unplanned delays in taking possession. If a new lease commences prior to moving in, you could be setting yourself up for a lot of additional costs and even potential legal issues with your current landlord.
To protect yourself from unexpected costs and logistic issues regarding lease commencement, your lease should state that “The Commencement Date will be the later of the 1st of the given month or the first of the month following delivery of the Premises by the Landlord”. You should also include “with substantial completion of construction” and request a CoC (Certificate of Occupancy). A CoC is a government issued document that confirms the building
construction is compliant with codes and the space is suitable for occupancy.
You can protect yourself further by including in the lease terms that the Landlord will pay a specific amount of money to the tenant for each determined period of time in which occupancy is delayed. That amount should equal the new rent costs plus any holdover penalty and any damages charged by the existing landlord if the tenant is liable for such costs. It is also wise to include a provision for terminating the contract without penalty if the lease has not
commenced by a certain date.
Ryan J. Hartsell , SIOR, MRE, Principal, and Managing Partner of Oxford Partners LLC, focuses on reducing the cost and risk associated with leasing and purchasing office and industrial property. He is recognized by his clients for his attentiveness, market knowledge, and negotiation prowess. He holds a master’s degree in commercial real estate and a bachelor’s degree in finance. As a third generation Houstonian and Principal of Oxford Partners, he has a unique appreciation for the business owners’ challenges by way of his own personal experience, which translates into better representation and empathy for his clients.