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Lacking an exclusivity clause leads to commercial lease disputes

On Behalf of | Nov 8, 2022 | Business Law |

After what might be months of planning, preparation and negotiation, signing a commercial lease is one of the final steps before you can open the doors of your new business. Keep in mind, though, that it always pays off to carefully read the terms of your lease before putting pen to paper.

One item to check before finalizing any commercial agreement is the exclusivity clause. If your lease lacks a provision for exclusivity or phrases it ambiguously, you can expect that it might cause a dispute with your landlord later down the line.

Why you should request an exclusivity clause

An exclusivity clause in a commercial lease agreement states that your landlord cannot rent property out to another business that might be a competitor to you. This prevents, for example, the emergence of a rival next door who will inevitably cut into your profits. If this were to happen, it would undermine your investments and financial projections, potentially putting you out of business if you become unable to meet any outstanding payment obligations.

How to resolve a dispute regarding exclusivity clauses

If your landlord leases a nearby property to one of your competitors, you might understandably raise a dispute out of frustration if your business begins to suffer. If your lease lacks an exclusivity clause, however, there might be little you can do unless your landlord is in violation of any other terms of the agreement. If you decide that you cannot continue to conduct business at the location, you can end your tenancy by giving one month’s notice in accordance with the New York Tenants’ Rights Guide.

Exclusivity is an important consideration when renting a commercial property in an area abundant with other businesses. Without an exclusivity clause, you might experience a heated dispute and loss of business.