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How to Buy or Sell a Medical Practice

Buying or selling a medical practice is complicated. Beyond the complexities that come with any major commercial transaction, there are also specialized legal considerations for the owners and operators of medical practices in California. In this article, our Fremont business law attorney discusses some of the most important things to know about buying or selling a medical practice in Northern California. If you have any specific questions, please do not hesitate to call our law office.

Due Diligence: Make Sure Your Counterparties are Reliable

You should never buy or sell any business without conducting thorough due diligence. Broadly defined, due diligence is an investigation, inquiry, and general exercise of care that a person should take before entering into an agreement.

Due diligence is essential when buying a medical practice. You must have a full understanding of the financial position of the business, including its assets and potential liabilities. Due diligence is no less important when selling a practice. Make sure your counterparties are reliable.

The Structure and Components of the Deal

The structure and components of a purchase agreement matter. Of course, this starts with determining the appropriate purchase or sale price for the medical practice. Parties should also pay very close attention to the structure of the transaction. You may be best off with a stock sale, whereby the entire medical practice is purchased. Alternatively, the parties may prefer an asset sale in which the buyer purchases specific assets held by the practice. It is always the best practice to have a medical practice purchase agreement reviewed by an experienced business lawyer.

Unique Concerns for Buying or Selling Medical Practices

Doctors and other medical professionals who are buying or selling a practice in California should be aware of some of the unique federal and state regulations that will impact their rights and responsibilities. Among other things, these include:

Restrictions on ownership: Any transfer of ownership of a medical practice in California must conform to the requirements of the state’s Moscone-Knox Professional Corporation Act. Medical practices are generally structured as PCs (professional corporations) — there are restrictions on who can own these business entities.
Patient notice: The Medical Board of California has regulations in place regarding patient notice when a practice is sold to another party or intends to close. Make sure that patients are notified of the transaction as soon as possible.
Medical records: The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires medical professionals (and medical practices) to protect sensitive medical records. HIPAA’s privacy requirements must be followed through all aspects of the sale.
Controlled substances: If the medical practice has access to any controlled substances, it is imperative that these highly-regulated drugs are handled properly in accordance with the applicable federal and state laws.

Finalizing the Sale of a Medical Practice

Before the medical practice sale can be finalized, there are several issues that need to be addressed. Once the final structure of the business purchase agreement is in place, be sure to attend to future-focused issues, such as tail insurance and whether there will be a non-compete agreement in place. An experienced California business lawyer can help you secure, organize, and complete all the legal and commercial documents that you need to finalize the transaction.

Consult With Our Bay Area Business Law Attorney Today

Lynnette Ariathurai is a top business lawyer with the skills and experience to represent medical practitioners with buying or selling a medical practice. Contact us today for your fully confidential initial consultation. We serve communities throughout the Bay Area, including Fremont, Newark, East Bay, Union City, Hayward, Santa Clara, Milpitas, San Jose, San Leandro, and Gilroy.

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Restructuring a Business When Adding a Partner

Successful businesses are not static. With market conditions constantly in flux, it is not uncommon for companies to restructure. You may need to restructure your business if you are bringing a new partner into the mix. In this article, our Fremont, CA business law attorney highlights some of the key ways in which you may need to restructure your business when adding a new partner.

Four Ways You May Need to Restructure Your Company When Adding a New Partner

Modifying Ownership Interests

A new business partner is likely to have some sort of ownership interest in the company. By definition, this means that the ownership stake held by you—and the other current business partners—will be diminished. Whether another current business partner is leaving the company or you are simply adding a new person into the business, you need to determine exactly how ownership interests will be modified. An experienced Fremont, CA business law attorney can help to ensure that this process is handled properly.

Changing the Legal Entity of the Business

A new partner may mean that you need to adjust the underlying structure of your business. A change to a new legal entity may be advisable or even required. Such as when you want to minimize your liability when adding a new partner. You may want to change from a sole proprietorship to a partnership or limited liability company. Changing the structure of your business will involve drafting and filing appropriate documents. It is imperative that you and your business partners carefully comply with all applicable rules and regulations.

There may also be tax considerations. For example, the State of California Franchise Tax Board notes that general partnerships (GPs) are not subject to an annual tax, but all limited partnerships (LPs) must pay an $800 annual fee to the state. Yet, this annual tax is often a small price to pay for the liability protection afforded by a limited partnership.

Drafting (or Renegotiating) Contracts

Contracts are at the foundation of many businesses, especially partnerships, limited liability companies (LLCs), and S corporations. If you are adding a new partner to your California business, it is essential that you have comprehensive, well-drafted agreements in place. In some cases, you may need to renegotiate some of your company’s existing contracts in order to make space for the new business partner.

Selling or Purchasing Assets

Finally, it may be advisable to sell or to purchase assets when adding a new partner to the company. The addition of a new business partner is often a good time to reorganize the company so that it is in the strongest possible position to take advantage of all available opportunities. Your business may be better off without certain underperforming assets on the financial books or may want to expand into new areas. As asset purchases or sales can be complex transactions, business partners should be prepared to consult with a lawyer.

Get Help from Our Fremont, CA Business Law Attorney Today

Attorney Lynette Ariathurai is an experienced partnership law attorney. For help restructuring your business when adding a new partner, please contact our firm today. With an office in Fremont, we are near Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, Santa Clara.

Business Formation & Planning, Contracts, ownership

Should Attorneys Speak for Employers During Employee Disputes?

To be successful, businesses and organizations need strong relationships with their employees. A legal dispute with an employee can cause serious headaches for a business owner or manager. Even worse, it could put the company or organization at a liability risk. A lawyer with experience representing employers can help your business navigate a conflict.

This raises an important question: Should an attorney speak on behalf of an employer during a dispute? The answer depends on the circumstances — though it is always important to consult with a lawyer as early in a dispute as possible. Here, our California employment law attorney for employers explains what you can expect from your lawyer during a dispute with an employee.

Preventing Claims through Proactive Guidance

It is important to emphasize that a dispute with an employee is not the same thing as an employment law claim. An attorney can help your business take proactive measures to prevent employee claims. This starts with putting the right practices and structure into place. By doing so, your business can go a long way towards reducing the risk of a dispute. Even if a dispute has already arisen, it may be possible to resolve the matter before a formal claim is filed.

If your Bay Area business is already locked in a dispute with an employee, a lawyer can help you take the appropriate action to resolve it. What exactly this entails depends on the specific situation, including the ultimate objectives of your business. In some cases, the best path forward is to take time to understand the employee’s concerns and look for a mutually workable, low-conflict solution that avoids a claim with the Labor Commissioner, Equal Employment Opportunity Commission (EEOC) or the California Department of Fair Employment and Housing (DFEH).

Defending Employment Law Claims

Not all employee claims are preventable. Even if your company does everything right, there is still a risk that you could face legal action from a current or former employee. Our experienced California employment law attorney for employers can defend your business or organization in an employee claim.

Once a formal claim is filed with the Labor Commissioner, EEOC, DFEH, or any other agency, it is best to let your employment law attorney speak on behalf of your business. It is still possible that the matter could still be resolved outside of court. Nonetheless, it is best practice to work with an employment lawyer for employers who can ensure that the rights and interests of your business are protected.

Get Help from an Employment Lawyer for Employers in California

Attorney Lynette Ariathurai is an experienced, results-driven employment lawyer for employers. If you have any questions about defending your business or organization against an employment dispute, we are more than ready to help.

Contact us now for a strictly confidential initial consultation. We represent employers throughout the Greater Bay Area, including in Fremont, near Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara.

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Best Practices for Navigating Changing COVID Laws for Businesses

The COVID-19 pandemic continues to affect communities around the world. According to data from the California Department of Public Health, there have been more than 4.1 million cases of the virus confirmed in the state as of mid-August of 2021—and with the Delta variant, case rates are rising once again. For businesses, navigating the ever-changing regulatory environment during the pandemic is challenging. Here, our Fremont, CA business lawyer highlights some of the best practices for companies looking to navigate COVID-19 regulations in the Bay Area.

Do Your Research (Local Law Matters)

You need to stay up-to-date on all applicable laws. Indeed, the only truly effective way for businesses to navigate the changing COVID-19 legal landscape is to work with an experienced business lawyer or do frequent independent research into the relevant rules and regulations. Notably, it is imperative that business owners refer not just to federal and state guidelines, but also to local rules and ordinances.

In California, the regulations sometimes vary from city to city or county to county. Here is an example: On August 2nd, 2021, Cal/OSHA released new guidance on masks. Under the statewide public health regulations, facial coverings are required in certain places, such as healthcare settings. For vaccinated people, masks are only “recommended” in most indoor workplace settings. However, some local governments have different requirements. For example, on August 3rd, 2021, the Alameda County Health Care Services Agency reinstated a full indoor mask mandate—regardless of vaccination status. Make sure you know the rules in your area.

Implement a Process for COVID-19 Planning/Rapid Decision-Making

As the COVID-19 outbreak is still a developing public health crisis, it is crucial that businesses in the Bay Area build and implement a process for pandemic planning and rapid decision making. Keep in mind that things can change quickly. Several factors are subject to change, including masking rules, vaccine regulations, social distancing guidelines, and capacity restrictions. A well-developed plan can make navigating the pandemic far easier. Among other things, your business should have:

A plan designed to meet your unique needs/industry
A proactive mindset, always ready to address changing rules
A clear chain of command to ensure swift and decisive decisions when necessary

Be Ready to Seek Professional Guidance on COVID Regulations

Owning and operating a business is difficult enough during normal times. With the COVID-19 pandemic posing a wide range of challenges on businesses in the Bay Area, it has become even more complicated. You should not hesitate to consult with an experienced California business lawyer who can help you and your partners manage the pandemic.

Schedule a Confidential Consultation with a Bay Area Business Lawyer

Attorney Lynnette Ariathurai is a skilled, solutions-focused advocate for business owners. If you have any questions about the best practices for navigating changing COVID-19 laws, our law firm can help. Contact us today for a strictly confidential consultation. From our Fremont law office, we represent businesses throughout the Bay Area, including in Hayward, Union City, Castro Valley, Milpitas, and Newark.

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Preparing Your Business for Bringing Employees Back to the Office in California

According to the California Department of Public Health (CDPH), more than 20 million state residents were fully vaccinated as of July 1st, 2021. With vaccinations rising and COVID-19 cases dropping, more and more employers are getting ready to bring their remote staff back into the office. It is a complicated thing to do—sorting everything out requires careful planning. Here, our Fremont, CA employment law attorney for employers highlights some of the key things to know about preparing your California business to bring employees back to the office.

Follow State and Federal Public Health Guidelines

As a starting point, business owners and managers should keep up with changing federal, state, and local public health & safety guidelines. For example, the Centers for Disease Control and Prevention (CDC) has provided a considerable amount of guidance for employers and employees. As an employer preparing to bring workers back into the office, you need to be ready to answer some key questions, such as:

Will you ask employees to show proof of vaccination status?
Will there be any masking or social distancing policies in place?
Do employees have the option to remain on a full or partial flex schedule?
What steps will you take if an employee tests positive for COVID-19?

Know the Unique Needs of Your Workplace

Every workplace is different. It is crucial that business owners consider the unique needs of their company. Among other things, this means taking proactive steps to adapt the physical workspace for the return of employees. In California, companies are using a wide range of strategies to prepare for the return of remote workers. Some companies are putting an emphasis on ventilation and sanitization. Other businesses are opting to reopen at partial capacity—allowing some employees to continue work remotely either full-time or part-time.

Getting Legal Advice on COVID-19 Laws

Before you bring your employees back to the office, you should seek legal advice concerning the current COVID-19 federal, state, county and city laws that apply to your business. Some questions you may have are:

What protocols must I follow at the workplace for my industry?
Can I require employees to be vaccinated before returning?
Can I terminate an employee who refuses to come back to the office?
Am I required to reasonably accommodate an employee and allow some employees to work from home and require others to work at the office?

The answer to each of those questions may depend on what industry you are in and what city, county, and state that your business resides in. The laws are complicated and continually changing, but you can rely on us for timely, accurate counsel.

Effective, Open Communication with Employees is Key

As employers in California bring their staff back to the workplace, it is important to develop clear, well-articulated policies. Open communication between businesses and employees can go a long way towards reducing conflicts. Employers may also benefit from adopting a more flexible approach that allows for a gradual return to the workplace for many workers. Of course, consistency and clarity are important. At the same time, that does not mean that every employee is dealing with the same issues. There may be some circumstances in which companies are required to make accommodations under the Americans with Disabilities Act (ADA) or other state/federal labor regulations.

Get Help from a Business Law Attorney in Fremont, California

Attorney Lynette Ariathurai is an experienced employment law attorney for employers. If you have any questions or concerns about preparing your California company for bringing workers back to the office, our law firm can help.

Contact us now to arrange a confidential appointment with an attorney. From our Fremont law office, our law firm represents employers throughout the region, including in the San Francisco Bay area and Silicon Valley.

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Business Legal Items Needed to Open a New Medical Practice in California

Are you preparing to open a brand new medical practice in California? If so, there are important business and legal considerations that you should be aware of. State law impacts the structure and ownership requirements of your business. Here, our Fremont business formation attorney provides a brief overview of the business and legal items needed to open a medical practice in California.

Entity Selection and Business Formation

Business startup is complicated—especially in the health care industry. California has specific rules and regulations regarding the formation of a medical practice. In fact, state law generally prohibits doctors and medical professionals from operating their business as a limited liability company (LLC) or traditional corporation.

Instead, medical practices are usually formed as a specialized type of business called a professional medical corporation. Under California’s Moscone-Knox Professional Corporation Act, there are restrictions on who can serve as an officer/director of a medical corporation and restrictions on who can own shares in these corporations.

Commercial Lease

A new medical practice must operate from somewhere. Most likely, this means that your new business will need to enter into a commercial lease agreement. In entering a lease agreement, there are a wide range of different issues that should be considered, including:

The location and convenience for current and future patients
The monthly cost and duration of the lease
Specialized medical issues, including waste removal, potentially hazardous materials on the premises, and storage of sensitive patient information
Common area maintenance (CAM) charges (also known as a triple net lease (NNN))

An experienced California business law attorney can help you negotiate and draft a commercial lease agreement that works effectively for your new medical practice.

Employment Matters

If your medical practice is planning on hiring employees, you need to take the time to put the proper structure in place. Make sure you and your business partners understand the legal requirements of your business. As an example, all employers in California with five or more total employees are subject to the Fair Employment and Housing Act (FEHA). An employment lawyer with experience representing business owners in the healthcare industry can help you create and implement strategies to limit conflict with employees and reduce your liability risk.

Business Contracts

In the modern business world, contracts are at the basis of most commercial agreements. Whether your medical practice is working with partner companies, such as a medical service organization (MSO), or entering into agreements with outside suppliers/vendors, it is essential that you rely on well-drafted business contracts.

Call Our Fremont, CA Medical Practice Formation Attorney for Help

Attorney Lynette Ariathurai is committed to providing forward-looking guidance and cost effective legal representation. If you have any questions about what business and legal items you need to start a medical practice in California, we can help.

Contact us today for a confidential initial consultation with a business lawyer. From our office in Fremont, we serve businesses and startups throughout the region, including in Hayward, Union City, Castro Valley, Milpitas, and Newark.

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Business Attorney for Doctors, Nurses and Medical Personnel

Building, growing, and managing a successful business is complicated — particularly for doctors, medical specialists, and other health care providers who must navigate some unique regulatory and logistical challenges. Attorney Lynette Ariathurai is a skilled business law advocate with extensive experience representing physicians and other health professionals. For a confidential consultation with a California business lawyer for medical professionals, please call our Fremont office at 510-794-9290 or send us a message online.

We Provide Business Services for Doctors and Medical Professionals in the Bay Area

Business Formation

We help health industry professionals and entrepreneurs form businesses under California law. The state’s Moscone-Knox Professional Corporation Act imposes significant restrictions on the ownership and control of many companies in the medical industry. Our firm will help you and your partners form a professional corporation that provides strong liability protection. We also advise health practitioners and entrepreneurs with buying and selling businesses and organizations.

Regulatory Compliance

Professional corporations in the health care industry must navigate complex regulatory compliance issues, including things like the Stark Law, federal anti-kickback statutes, and California state rules. Our founding business attorney Lynette Ariathurai has the knowledge and legal skill to help you understand your obligations.

Professional Licensure Issues

Business attorney Lynette Ariathurai helps physicians and other health professionals navigate the full spectrum of professional licensing issues. If you are a doctor, a nurse, a dentist, an optometrist, or any other health industry business owner with questions about a professional license, we are here to provide guidance.

Contract Review and Negotiation

Contracts are at the foundation of most commercial relationships. Our business lawyer for medical practitioners provides representation on business contracts. If you have any questions or concerns about the drafting, review, or negotiation of business contracts, we are more than happy to help.

Employment Law

Many professional medical corporations in California have employees. Lynette Ariathurai provides a full range of employment law services for employers. Our focus is on helping you and your business partners put the proper structure in place to prevent claims, including employee handbooks, employment law agreements, and advising employers on wage & hour laws, worker discipline and termination.

Dispute Resolution

Disputes happen. If you are involved in a dispute with a patient, an employee, a vendor/supplier, a competing firm, or any other party, it is crucial that you take immediate action. With experience in mediation, arbitration, and litigation, our Fremont, CA business law firm will protect your rights and help your professional practice find the best path forward.

Get Help from Our California Business Lawyer for Medical Professionals

Attorney Lynette Ariathurai is committed to protecting the rights and interests of clients. We provide reliable, solutions-driven business representation to physicians and other medical personnel. Contact our law firm now to schedule a confidential appointment with a skilled attorney. From our Fremont office, we provide business services to doctors, nurses, and medical professionals throughout the region, including those in Newark, Hayward, East Bay, Milpitas, Union City, San Leandro, Gilroy, San Jose, and Santa Clara.

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Medical Partnerships, Leases and Entity Formations

If you are planning to open your own medical practice in California, it is critical to understand how California law affects your ability to choose a business structure for your medical practice and to enter into business with other healthcare professionals. Generally speaking, California law allows physicians to operate medical practices as sole proprietorships, partnerships with other physicians, and as professional medical corporations. Other types of common business structures are not permitted under California law for healthcare businesses. Beyond entity formation, physicians and other healthcare providers who are considering the possibility of starting a new practice will also have to consider specific issues when it comes to leasing commercial space for a healthcare business.

Our experienced California business formation lawyer can help. Attorney Lynnette Ariathurai serves business owners throughout Northern California.

Forming a Medical Partnership

If you are thinking about opening a new medical practice and want to keep the structure of your business relatively simple, California law allows you to form a partnership (or to operate your healthcare practice as a sole proprietorship). However, any physician or other healthcare professional in California should learn more about the limitations of medical partnerships in relation to personal liability and taxation as well as the benefits of creating different business structures for the assets of the business versus the medical practice. Many healthcare providers and medical professionals who open new or are expanding practices find benefits in forming a professional medical corporation.

Professional Corporations for Medical Practices

Under California law, healthcare practices cannot form traditional certain business structures such as a limited liability company (LLC) or a corporation when forming a business. Instead, professional healthcare providers, including licensed physicians, surgeons, nurses, chiropractors, psychologists, optometrists, clinical social workers, and many other professionals must create a professional medical corporation. There are many benefits to forming a professional medical corporation, including limiting liability (some limitations arising out of medical malpractice), as well as tax benefits similar to those of an S-Corporation.

The Moscone-Knox Professional Corporation Act explicitly outlines the types of professional services that are provided in a professional medical corporation, and what kinds of healthcare providers or medical professionals can be officers, directors, and own shares in these types of corporations.

Commercial Lease Considerations for Healthcare Practices

In addition to the complicated issues surrounding entity formation for healthcare practices and businesses, it is important to work with a California business lawyer on any commercial lease for a healthcare practice. There are a variety of issues that you should consider in your lease beyond those that might appear in another kind of commercial lease, such as:

Tenant and landlord responsibilities concerning HIPAA and patient files stored on the premises
Medical waste and removal
Use of medical devices and storage of medical materials on the premises
CAM or NNN expense distribution between landlord and tenant
Parking space for patients

Contact a California Entity Formation Lawyer

If you are a healthcare provider and are considering your options for starting a new practice, it is critical to seek advice from a California entity formation attorney about the nuances of entity formation for medical partnerships and corporations, as well as the complexities of medical commercial real estate leases.

Attorney Lynnette Ariathurai is committed to representing business owners in Northern California and can speak with you today about medical entity formation. We serve business owners in Fremont, Hayward, San Leandro, Gilroy, Milpitas, Union City, East Bay, San Jose, Santa Clara, and Newark. Contact us for more information about how we can assist you with your new medical practice.

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California Consumer Privacy Acts for Commercial Websites

Recent changes to California consumer privacy laws affect most e-commerce websites in the state, and it is critical for business owners who run e-commerce websites to understand consumer rights and business responsibilities. Whether you are currently running an e-commerce website or considering the possibility of launching one soon, you should seek advice from an experienced California business lawyer about the California Consumer Privacy Act of 2018 and Prop 24. Both laws expand consumer privacy rights, and it is important for companies to comply with these laws. Attorney Lynnette Ariathurai can assist you in drafting and updating business privacy policies to ensure that your company remains in compliance with current state law.

California Consumer Privacy Act of 2018

The California Consumer Privacy Act of 2018 (CCPA) took effect on January 1, 2020, and it impacts most e-commerce websites viewed by California residents if the business (i.e., the website owner) collects any information from the consumer either directly or indirectly and then sells the information. The responsibilities of e-commerce sites under the new law extend relatively widely because the definition of the word “sale” is defined broadly.

What this means for your business is that, if you have a website where you conduct any kind of e-commerce and you collect information from consumers who visit the site, it is critical to seek advice from a California business law attorney about your company’s privacy policy. Most company privacy policies drafted prior to January 1, 2020—when the new law took effect—will not be in compliance. It may be necessary to completely redraft your company’s privacy policy in order to comply, or at the very least, to revise the policy accordingly.

As a business owner, you should know that this law specifically lays out format requirements and provides detailed information to California residents about their privacy rights and how to exercise their rights. As such, businesses could face claims from informed consumers if they do not take steps to ensure that their privacy policies are in compliance.

Prop 24 Further Expands Consumer Privacy Rights

Beyond the California Consumer Privacy Act of 2018, Prop 24 also expands consumer privacy rights in the state. This law passed in November 2020. It amends the CCPA with a “more comprehensive privacy scheme,” according to Brookings, creating the California Privacy Rights Act (CPRA).

The new law requires businesses to protect personal information collected from consumers by “reasonably minimizing data collection, limiting data retention, and protecting data security.” It also requires businesses in California to “conduct privacy risk assessments and cybersecurity audits, and regularly submit them to regulators.” Consumers may also opt out of the sale or sharing of their personal data.

Contact a California Business Law Attorney for Assistance

Website owners and companies that engage in e-commerce need to work with an experienced California business lawyer to draft new policies or to update existing policies to guarantee compliance with new consumer privacy laws in California. Attorney Lynnette Ariathurai has years of experience representing business owners in Fremont, Hayward, San Leandro, Gilroy, Milpitas, Union City, East Bay, San Jose, Santa Clara, and Newark and can talk with you today about reviewing, drafting, and updating privacy policies for your website. Contact us to learn more.

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Things to Consider for Commercial Real Estate Leases – for Landlords

Lynnette Ariathurai, Bay Area Business Attorney, Fremont, Hayward, CA

Owning commercial property in California can be lucrative, especially when that property is located in an area that is highly trafficked and desirable for businesses in the region. At the same time, it is important to recognize that the value of a commercial property investment depends on having a strong, well-drafted lease agreement.

The lease is the basis of your relationship with a commercial tenant. It is crucial that a lease effectively protects your interests in all possible scenarios. Here, our Fremont commercial real estate lawyer highlights six important issues that landlords should consider when negotiating and drafting a commercial lease in California.

Commercial Rent (Base Rate, Utilities, Percentage Leases)

It is no secret that the most important thing for landlords is collecting rent. Rental payments are the lifeblood of commercial real estate investment. A well-drafted commercial lease will help you ensure that you are in the best position to get full and fair market value rent for your property and that you can actually collect the rent.

A commercial lease should clarify exactly who is responsible for all costs—it should specify the amount of base rate, the date it is due, and payment of utilities. In some cases, commercial rent is based, in part, on business revenue. Often referred to as a “percentage lease”, it may be a good option for some California landlords.

Duration of the Lease (Early Termination/Renewal Rights)

A commercial lease should always have a well-defined duration. Both parties need to know exactly how long their current obligations will last. Beyond that, commercial landlords should also consider including provisions that clarify what will happen at the end of the lease. Among other things, you may want to consider:

Automatic renewal rights (first refusal rights);
The ability to extend the lease; and
Early termination options.

At the end of the current commercial lease term, the landlord-tenant relationship will either be extended or it will terminate. It is useful to operate under an initial commercial lease that helps facilitate a smooth transition, whatever the parties decide to do.

Alterations, Improvements, and Maintenance During the Tenancy

Commercial leases should have clear information about the commercial tenant’s ability to make any alterations to the premises during the terms of the lease, as well as information about whether you or the commercial tenant will be responsible for necessary improvements or maintenance during the tenancy.

Insurance and Indemnity

A commercial lease should always prepare for the possibility of unexpected loss—whether because of property damages or a lawsuit from a third party. This starts with insurance. While a commercial landlord will typically maintain their own insurance policy, it is important to consider whether a commercial tenant will be required to have a liability policy or another type of insurance policy as well. Additionally, commercial landlords may also want to consider some type of indemnity clause. As defined by the Cornell Legal Information Institute, an indemnification clause is a contract provision that shifts a liability risk from one party to another.

Collection of Overdue Rent and Evictions for Non-Payment

Unfortunately, not all commercial tenants live up to their responsibilities. You may run into a problem collecting rent. If so, you have the right to take immediate action against the business, potentially including initiating eviction proceedings. Your commercial lease is the basis of your ability to collect rent and evict a tenant for non-payment. A properly drafted commercial lease will ensure that you are in the best position to collect, even if a commercial tenant files for bankruptcy.

Termination of the Lease for Other Types of Contract Breaches

As a tenant, the primary obligation a business owes to its commercial landlord is a timely rental payment. Of course, that is not typically the only obligation. Landlords also need a commercial tenant who will treat their property well. In a commercial lease, you should strongly consider including a clear definition of what constitutes a breach of contract sufficient to justify termination of the lease and removal of the tenant. For instance, a commercial tenant may be removed for creating a nuisance or engaging in unlawful activity on the property.

Contact Our California Commercial Real Estate Attorney Today

Are you planning to rent commercial property to a new business tenant? You should seek advice about your commercial real estate lease from an experienced Fremont business law attorney. Attorney Lynnette Ariathurai is committed to serving commercial real estate landlords in California and can discuss the issues you should be considering in your commercial lease. Contact us to learn more about the services we provide. We serve clients in Fremont, Hayward, Milpitas, Union City, Newark, and throughout the East Bay.

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