Before making
the decision to relocate, there may be terms within your current lease
which may impact your plans:
Lease
Expiration
Holdover Rights
Sublease/Assignment
Restoration
While this may
sound simplistic, the expiration of your existing lease, if you have
one, is usually the issue that drives the entire occupancy process.
Holdover rights (see below) are usually very unfavorable to tenants.
In the typical lease, landlords often have the right to at least 1.5
times the rent, if not 2 or 3. Further, landlords in tight markets are
unlikely to be happy to allow you to stay in your space past lease
expiration because they may have already committed your space to
another company. The landlord may incur penalties if you do not vacate
on the appointed date. If you are in a situation in which your lease
will expire before you can relocate, contact the landlord or its agent
when you know and attempt to negotiate an extension. Although
financially it may be onerous, it will be better than having your
company and employees being evicted from your space with no place to
go. Generally it takes two to three months for the legal process for
an eviction to be complete, but it is a situation we recommend you try
to avoid.
The right to
holdover in your premises past lease expiration is not automatic.
Leases generally provide for terms on which you pay should you
holdover, but the landlord typically still has the right to begin
eviction proceedings. Holdover rent typically ranges from 1.5 to 3
times the rent you paid during the preceding month. Generally you can
hold over in opposition to what the lease states. It takes two to
three months for the landlord to be able to forcibly convict you, but
it is a situation we recommend you try to avoid.
Should you need
to relocate prior to your lease expiration with an adequate amount of
time to sublease your space, you should carefully re-read the
sublease/assignment clause in your lease. You may or may not have
rights to sublet and the terms on which you are allowed to sublet may
be onerous to you. Also, pay particular attention to whether profits
can be made from subleasing. Generally, the landlord takes all the
profit or a tenant may get a 50/50 split after the cost of subleasing.
Restoration
generally refers to restoring the premises of your space to the
condition you received the space when you initially leased it. You
should check to see if this is required as that could be a substantial
cost to your company. Generally anything affixed to the premises
(anything nailed, screwed or glued down) stays in the space and
remains the property of the landlord. In the early 1990's a landlord
on Park Avenue successfully used the restoration clause against a
commercial bank to force it to comply with the landlord's version of
sublease profits. At stake was almost $90 million.
