American Indian Owned Law Firm

Can the landlord restrict your business?

On Behalf of | Oct 5, 2022 | Commercial Real Estate Transactions & Leasing

Before leasing commercial premises for your business, it is crucial to understand every last clause in the lease contract.

One that catches many business owners unaware is a use clause. Understanding more about how a use clause works can help you negotiate a better lease.

What is a use clause?

A commercial landlord may impose restrictions on how you can use the premises you rent from them. For example, they may say you can only keep your shop open until 8 pm or that you cannot open on Sundays. Alternatively, they may allow you to open the hours you wish but forbid you from running certain types of business. Maybe you can sell clothes there, but they prohibit you from turning it into a fast food joint.

Can they do this?

Provided a landlord puts something in the contract, the law would probably back them up. A court would likely consider it your responsibility to read and understand the whole contract before you signed it. 

There may be exceptions if, by refusing to allow you to do something, the landlord breaches broader state or federal laws. Zoning laws may also restrict what you can carry out in a particular place. It may be a landlord is just reiterating those rules.

Can you sublet to someone else?

Let’s say your business idea is not working out, or your landlord is being a pain. Could you sublet to someone else in order to get out of there? If the landlord inserted a no subletting clause, then you probably cannot.

The key is to understand your contract first. These agreements can sometimes use complex wording. Getting legal advice to review your contract first reduces the chances you need it to handle a contract dispute later.