Commercial Leases: Things to Know
A commercial lease is a frequently overlooked aspect of business until necessary. When a business needs space, it’s a given that they’ll find a building or office to rent, sign the papers and move in. However, failing to understand the responsibility of renting a commercial space puts your business at risk.
In fact, not understanding the terms or choosing a lease that’s not a good fit could be detrimental to your business. Below are a few things to keep in mind when looking for commercial property to rent.
Renting for a Business is Different than Renting for Personal Use
In most cases, residential leases are straightforward. You rent a property for a certain amount of time, pay a certain amount of money up front and per month and move in. Commercial leases are different.
To begin, commercial leases are not subject to the majority of consumer protection laws that residential leases are; security deposit caps do not apply. Commercial leases are long term and more than one month’s rent is usually at stake should the contract be broken. Furthermore, commercial leases are individually customized to the landlord’s lease; this generally means the lease is more complicated and may have small clauses and requirements not seen on residential leases. Working with an experienced contract lawyer is essential. On the positive side, commercial leases are usually more open for negotiation between the business owner and the landlord.
Points to Be Aware Of
When selecting a rental space for your business, the following points should be of particular interest:
- The lease term (or length of the lease) including renewal options and penalties for breaking the lease,
- Additional costs (property taxes, insurance, maintenance costs),
- Rent and escalations,
- The exact spaces included in the lease (hallways, kitchens, stairways, elevators, restrooms and more),
- The security deposit amount,
- Who will pay for repairs and improvements,
- If subleases are permitted,
- Where signs may be placed,
- Lease termination terms, and more.
Signing a commercial lease is a long-term responsibility that should be taken seriously and investigated carefully from the start. Choose an experienced business and contract law attorney to ensure you and your business are adequately protected. Contact Attorney Michael Hynum with Hynum Law today to learn more.