Six Things To Do Before Signing A Commercial Lease Agreement
If you're just starting a business, you are probably not too familiar with commercial leases. Even if you've been in business for some time, a commercial lease agreement is not something you sign every day.
Most commercial leases are long-term, lasting 5-10 years. You want to make sure you are not selling yourself short.
So, what do you need to do before you sign on the dotted line?
Read and Understand the Lease.
You need to make sure you fully understand the lease. You may need the services of a real estate attorney or a tenant broker to assist you.
They have gone through similar documents tens or hundreds of times and know what to look out for
What Does the Lease Cover?
Over and above your usable space, you will most likely pay more for Common Area Maintenance (CAM). This fee typically covers common facilities such as washrooms, parking, garbage collection and security.
But don't make any assumptions. Let everything be put in writing. If any service is not mentioned in the lease agreement, ask the commercial leasing agent to clarify.
Negotiate
You may not know this but a lease agreement is not cast in stone. Find out if your lease agreement is negotiable. Most are; at least partially.
Identify the clauses you are uncomfortable with and seek to negotiate them. You can consider negotiating CAM fees or asking for a freeze on rent increase for a certain period.
Look out for Hidden Charges
Watch out for hidden charges. Make sure the landlord does not transfer his fees to you. Only pay what is related to your lease and not to other people's leases. Pay special attention to administration fees to ensure they are not inflated.
Termination Clause
If you sell the business to a third party, can the landlord terminate the lease? Businesses depend a lot on the address for their success. Such kind of a termination clause will limit your ability to sell the business.
Repairs
Who's in charge of repairs? Which ones? Here again, you can negotiate for a freeze on repairs for a certain period following the sign of lease.
If not handled properly, a commercial lease agreement can eat into your bottom line; even force you out of business.
To avoid regrets, get the services of good real estate companies or a tenant broker. Next, read and understand the lease agreement. Clarify any grey areas and negotiate the terms. Only then should you sign on the dotted line.