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Tips for making your first commercial lease agreement

Your commercial lease is critically important to the survival of your new small business.

There are several provisions in your commercial lease that you need to review carefully before you sign it:

-- What are the non-monetary grounds for eviction?

Not paying your rent is a pretty standard reason for eviction. However, your landlord may want the right to evict you based on certain non-monetary grounds as well -- and this isn't unusual.

For example, if your lease requires a liability insurance policy, you may not be able to let that lapse without risking the termination of your lease. Another common clause is the requirement that you keep all common areas clean and neat. Your landlord may also require you to provide security for your business if it operates after a certain hour of the day.

-- Are you allowed to sublet your lease?

If you're locked into a lease that spans several years, you may want the right to sublet your space. This is particularly handy if you aren't able to keep your business afloat or something changes and you either can't operate the business any longer or don't want to do so.

-- Do you have clauses that will guard your business against potential landlord problems?

Unless you have it expressly written into the lease, your landlord could rent to one of your direct competition -- which isn't something you ever need.

Similarly, if you rent one storefront in a strip mall, you don't want to be the only store open while the rest of the mall sits vacant. That can affect the way potential customers view the health of your business.

You should have the right to veto the rental to a competitor and compel your landlord to get the other spaces rented within a specific time frame -- or be allowed to pull out of your lease.

There are quite a few other important issues that need to be reviewed before you sign your lease. An attorney with experience in commercial real estate to review the terms of your lease before you sign -- it could be one of the best investments you make as you start your new enterprise.

Source: U.S. Small Business Administration, "Leasing Commercial Space," accessed April 11, 2017

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