Commercial leases can be overwhelming and confusing to look through. There is less regulation with commercial leases than there is in residential ones, so it’s especially important to analyze your lease and consider what it means for you.
One bad clause could cost your business thousands, so don’t take any chances. Here are a few things that you should be sure to look at:
Rent and other costs
One of the first things you have probably looked at is the cost of the rent. Past what you will be paying for the next few months, pay attention to anything that mentions future increases. Then, look for any other costs. These will be things like for common area maintenance (CAM), taxes and utilities. Again, pay attention to increases and caps on charges.
Be sure to verify exactly what space you will be renting out by physically measuring it and comparing it to the description in your lease. You should also know what you are allowed to change in the space, like adding new light fixtures or updating the bathroom.
Non-compete and dispute resolution
If your property is near other businesses, you may want to ask for a non-compete clause. This means that your landlord will not be able to rent space to a business that is competitive with yours.
If you and your landlord have a dispute, which isn’t uncommon, it’s smart to have a plan for resolution in your lease. Typically, resolving disputes via mediation or arbitration is more beneficial than going straight to court.
The end of your lease
When will your lease term end? Often, it’s safest for new businesses to use a short lease with renewal options. If you end up needing to get out of your lease, what are your options there? There should be guidelines in place for terminating your lease or finding another business to sublease in your place.
The best way to know if your lease is going to work for your business is to have a real estate attorney look through it. They will be able to tell you if there is anything questionable and help you negotiate to get the best possible terms.