What Every Business Should Know About Commercial Leases

A nice business location is important for any business to transact its businesses. However, you should know that certain terms of the lease might have a negative impact on the success of your business.

There are different types of commercial leases mostly categorized by the purpose of renting the property, for example, a retail store, industrial property or an office. Here are the common types.

• Gross lease: The tenant pays a set amount of rent while the landlord takes care of tax and insurance and other costs
• Net lease: The tenants pay the rent as well as a portion of other costs such as maintenance fee, insurance, and operating expenses
• Triple-net lease: The tenant pays the rent plus all the related costs such as insurance, operating expenses, and maintenance fees
• Ground lease: The tenant leases a piece of land and may build on it. All the improvements on land revert to the owner at the end of the lease.
• Shopping center lease: The tenant pays the base according to the square footage of the premise. The tenant also pays some common charges such as parking lot charge and other common areas charges

Depending on the type of lease that you sign, the costs will differ.

Here are other important areas that you should consider

Commercial leases are not standard

Unlike residential lease agreements, many commercial leases are not standard-form agreements. Each lease is created as per the needs of the landlord. Read the fine print before appending your signature to the lease agreement. It is advisable that you seek a corporate lawyer to assist in negotiating better terms with the property owner.

Commercial leases and long-term

Most of the commercial leases go for years in the same conditions that were put in the beginning. It is difficult to change or cancel the commercial lease at will as it legally binds the two parties. There are financial consequences to such a decision.

This is why it is important to read and understand the lease as your rights are dependent on the lease. The law assumes that you understood the lease before signing and therefore cannot claim ignorance.

Get to know who will carry out the repairs

Many commercial property owners do not want to take responsibility for the repairs of the house and will seek to place all the responsibilities on your shoulder as the tenant. You should only take responsibility for repairs until the item in question is back to the condition it was when you entered into a lease. (Have it in the lease).

Due diligence is very important

There is a principle of ‘buyer beware’ that relates to a tenant taking a lease similar to the way a purchaser buys a property. You as the tenant must satisfy yourself that the property is suitable legally and physically for your intended use before signing up the contract. Your corporate lawyer can help in making the right searches such as planning permissions, the right of way, closeness to the contaminated land, risk due to being close to mining areas, property structural integrity reports, zoning restrictions among others. If you enter into an agreement and later discover that any of these things are likely to affect your business negatively, you may not a comeback against the landlord.

Do not forget other terms

• Look for the option of expanding the space should the business expand
• Check for the option of renewing the lease
• Ensure that there is a reasonable notice should the lease be terminated
• Know the security of your deposit and conditions for returning it
• Ensure that the building complies with the Americans with Disabilities Act (ADA)

A competent corporate lawyer with knowledge in business law is your only way to ensuring that all the above is fully complied with in the lease.