1.Understand the Binding Nature of Your Commercial Lease
This should go without saying, but many business owners don’t fully understand that their commercial lease is legally binding. If your business struggles and you need to exit the lease, you can’t simply back out. For example, signing a five-year lease at $4,000 a month means committing to a $240,000 contract. One of the essential tips for signing a commercial lease is to approach it with the understanding that the agreement is enforceable, and the landlord has the right to take legal action to recover losses.
2.Review What’s Included in the Lease
If a landlord says, “We can address that after you sign,” consider looking elsewhere. Ensure any verbal promises are written into the lease to avoid disputes later. Remember, if it’s in the document, it will likely be enforced. Reviewing everything carefully is one of the essential tips for signing a commercial lease to safeguard your interests.
3.Lookout for CAM Charges
Common Area Maintenance (CAM) charges often include costs for property taxes, parking lot upkeep, landscaping, or even holiday decorations. Landlords frequently pass these costs to tenants. Negotiate limits on CAM expenses to avoid unexpected financial burdens.
4.Beware of the Square Feet
Rent is usually calculated based on square footage, but landlords can incorrectly lists the square footage. Verify the dimensions to ensure you’re paying the correct rate and not overcharged.
5.Review the Use Clause and Exclusive Clause
A use clause specify how the property can and cannot be used, while exclusive clauses prevent landlords from renting to competitors in the same location. Carefully reviewing these clauses is another of the essential tips for signing a commercial lease, as they can significantly impact your business operations.
Exclusive Causes
Exclusive causes are often in most shopping center leases. This allows a client, typically a larger client, to corner the market on a particular product or service.
For example, if you run a hair and nail salon in one shopping center with an exclusive lease, the property manager cannot lease another hair and nail salon in the exact center. This is to give the company exclusivity and to keep down their competition.
If you do receive an exclusive, but the property manager or landlord does not adhere to your contract, you can sue them. In this case, make sure that you have a provision in the lease contract that allows for a fixed amount of damages to be paid to your business in the event that they breach the agreement.
6.What Is Near the Commercial Space?
Evaluate the location carefully. Check the traffic patterns, potential loitering, delivery access, and overall suitability for your business. Visit the area during the day and at night to assess the activity levels.
7.How Responsive Is the Landlord?
A commercial lease often spans several years, so having a responsive landlord is crucial. Speak with current tenants to gauge their experiences and ensure the landlord maintains the property and promptly addresses issues.
Protect Your Business Interests
Signing a commercial lease is a significant commitment. Consult with a business attorney to review and negotiate the terms. Following these essential tips for signing a commercial lease will help you avoid costly mistakes and secure a lease that aligns with your needs. If you are ready to work with someone who will protect your best interest, contact us.