When it comes time for a business to find a home, there is a lot to be decided. Once the perfect place is found, the lessor and lessee alike will want to work to ensure that the lease is favorable to both parties. Here are five points to consider before signing a commercial lease:
- Rent: This is one of the most fundamental aspects of negotiating a favorable lease. Rent does not refer solely to the amount you pay every month. This aspect of the contract will cover topics such as rent increases and who will pay for various operating costs (e.g. the electric bill).
- Property Description: If your company is planning to rent an entire building, the description of the property you are renting may be fairly straightforward. If, however, you are only renting some office space, it’s critical to have the lease spell out exactly how your space will look and to how much space your company is entitled. If, for example, the offices you are renting offer common areas your lease will need to specify who has access and who exactly is responsible for maintenance of these areas.
- Termination: There are many reasons that you may need to end your lease earlier than planned. Your lease should spell out the details of how and when you may end your lease. On the flip side, you will also want to ensure that your landlord cannot suddenly terminate your arrangement without notification and due cause.
- Use: Landlords may be very particular about how you use the space you are renting. Ensure that your lease allows for all of your desired business activities, from hanging signs to hosting parties.
- Non-Compete Clauses: Depending on your type of business, you may wish to negotiate a non-compete with your landlord. This basically says that your landlord may not rent additional nearby spaces to stores or companies that engage in business similar to yours.
Crafting a solid and favorable lease takes time, patience, a willingness to negotiate and a tremendous attention to detail. It is also an important tool for preventing future landlord-tenant disputes, ones that could completely derail your business.