When you find a commercial space to rent for your business, you may believe that all commercial leases are created equal and assume that the terms are fair and in line with Texas law. However, there are many different terms in a commercial lease that can be beneficial or detrimental to your business. One important clause that often goes unconsidered is a “use” clause.
There is more than one type of use clause that can be included in a commercial lease, all of which can affect how you run your business. Understanding these clauses and what they mean to your business is essential to financial success.
Contract Law and Use Clauses
Understanding the Control a Landlord Can Have Over Your Business
Texas property law is quite extensive when detailing the rights of both tenants and landlords in a commercial lease. A landlord can potentially include several clauses in a business contract that may make it more or less appealing to a business tenant. The following are some of the more common use clauses a landlord might include, either to protect their property or to entice a prospective tenant to sign the contract.
Landlords have a lot of power when writing contracts. If you don’t understand what that contract says, it can hurt your business.
Restrictive Use Clauses
This type of clause prohibits you from using the commercial space in certain ways. For example, a landlord may prevent tenants from cooking or selling food in that space. This type of clause may be fine if the restrictions do not apply to your business (e.g., you were never planning on cooking or selling food). However, some restrictive use clauses can be broad, and you may not realize the potential effects on your operations.
Landlords usually include these types of clauses to protect their property from damage or loss of value. For example, a contract may prevent cooking because the property owner is worried that cooking will cause smoke damage to their ceiling. Alternatively, a restrictive use clause might be included in a contract because of local land use restrictions. You may be able to get a restrictive clause changed or removed if you can assuage the concerns of the landlord or convince the municipal zoning authority to change the zoning of the building.
How can use clauses affect the financial future of your commercial enterprise? The answer to that question depends on your business plan and the use clauses in your lease contract. Contact Weisblatt Law Firm at (713) 666-1981 to learn more.
Permissive Use Clauses
Instead of stating what you cannot do, permissive clauses state how you can use the space, thereby prohibiting most other activities. These clauses should be carefully examined to ensure they include permission for all of your intended operations.
Despite the name, permissive use clauses are effectively identical to restrictive use clauses, just worded differently. Many potential tenants may not realize that these clauses implicitly exclude every activity that isn’t explicitly listed. That can make these clauses significantly more dangerous to potential tenants.
Exclusive Use Clauses
Exclusive use clauses can be extremely beneficial for your company and you may want to negotiate with the landlord to obtain one. This gives your company the right to be the only one conducting your type of business in a development. For example, if you do not want to compete with other salons in a shopping center, you may try to obtain exclusive rights to use the commercial space as a salon.
What To Do When Dealing with a Bad Use Clause
How a Business Contracts Lawyer in Houston Can Help
While Texas property laws don’t meaningfully limit what landlords can write into a contract, that doesn’t mean they have free rein. Contracts are still expected to be fair to both sides.
The best way to avoid being constrained by a bad use clause is to ensure it never exists in the first place. A good business contract lawyer will scour potential contracts and prevent you from signing one that would harm your business.
But what if you are already constrained by a bad contract? An experienced attorney may be able to negotiate a new contract before the term of the current contract expires. If the landlord refuses to negotiate, your lawyer may also be able to find a loophole that will allow you to escape the contract early. This creates an alternate problem where your business no longer has a physical building, but that may be preferable to being stuck in a contract that harms you financially.
Contact a Houston Business Contracts Attorney for Help Today
It is critical to have a highly experienced business contracts lawyer review any commercial lease agreement before you sign it. You do not want to learn that you are stuck in a lease that limits the type of business you want to run. At The Weisblatt Law Firm LLC, we review, negotiate, and draft all types of business contracts for companies of all sizes in and around Houston.
If you are considering leasing space for your commercial enterprise in Texas, Weisblatt Law Firm can help you negotiate fair use clauses for your contract. Contact us today at (713) 666-1981 to schedule a consultation.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
