Website design By BotEap.comMany people, as prospective tenants, tend to assume that a commercial lease in Hawaii is designed to be fair to both parties and therefore do not bother to read its terms and conditions carefully. That’s a big mistake and quite shocking when you consider that commercial leases are typically twenty to thirty pages long containing numerous pro-owner provisions. Choosing not to have a Hawaii attorney review your lease seems shortsighted given the risks of not understanding what you’re getting into.

Website design By BotEap.comHowever, for those courageous individuals who choose to enter into a commercial lease in Hawaii without legal assistance, the following are some things to consider before signing:

Website design By BotEap.como Make sure the lease specifies when the landlord will deliver the facilities to you, especially when the building has not yet been built. Understand what your options are if the facilities are not delivered to you on time, as this could affect the date you can open the business. If the building has not been built, you need to make sure that you can terminate the lease if the building is not ready for occupancy on the date you need it.

Website design By BotEap.como What is the permitted use for your facilities? The landlord tends to favor a use clause that is very narrow because a different use might be undesirable for the landlord or the other existing tenants, whereas a tenant would normally want a wide use provision that allows for uses that may not have been intended. or early in the execution of the lease.

Website design By BotEap.como Are there any restrictions on the assignment of the lease or sublease? Is the consent of the landlord required? For those tenants looking to transfer the property to another potential tenant, this clause may restrict such transfer.

Website design By BotEap.como Does the landlord have the ability to relocate you at any time? If so, you may want to insert language stating that the relocation must be to a location of comparable size, quality, and suitable for use.

Website design By BotEap.como Is there a “no-compete pact”? If so, what is the area (radius) in which you are prohibited from competing? Unlike the mainland, Hawaii is so big. In fact, we have seen some non-compete areas that include the entire island of Oahu, which is unreasonable.

Website design By BotEap.como If possible, make sure you have the exclusive right to conduct your type of business in the building. Otherwise, your biggest competitor may end up being your next door neighbor.

Website design By BotEap.como Does the landlord require that you (and / or your relative or spouse) sign a personal guarantee? Note that if the tenant breaches the lease, the landlord can turn to the parties who sign the guarantee.

Website design By BotEap.como How long is the lease? Hawaiian law states that a transmission tax must be paid on all leases or subleases with full unexpired terms of five years or more.

Website design By BotEap.como Are there provisions that require me to pay any interest? Most commercial leases have a provision that the landlord will charge the tenant interest “at the maximum rate allowed by law” if a monetary default occurs, such as when the tenant must pay the landlord interest on all amounts due. Please note that Chapter 478 of the Hawaii Revised Statutes (Hawaii’s “Interest and Usury” Statute) does not apply to business transactions and therefore there is no interest rate cap on a business environment.

Website design By BotEap.comAs you can see, this is not a complete list of issues that need to be addressed when leasing your business location. Each tenant’s situation may be different, so the lease must be tailored to their unique circumstances. This makes it very important to seek a consultation with an attorney who has the experience to analyze your situation and can suggest modifications to the lease that are more favorable to you. Don’t wait until it’s too late.