Browse Instructions
How to Assess a Commercial Lease
Posted By: hierh2dm;
Category: Business, Finance & Industrial;
November 26, 2008
Points to consider before signing a commercial lease for a business.
1
The length of the lease is the most important term to negotiate. The shorter the better! You do not want to lock yourself into a lease for over five years. However, make sure you have an option in the lease to renew for a term at the same price or slightly higher. If not, the landlord can raise the rent as high as he/she wants when your term is up. That can leave you in a really tight spot if you have a thriving business you wish to keep open.
2
Try to negotiate a cap on CAM charges. These are common area maintenance charges that you pay a percentage of for being located in a shopping center. These can add up very quickly and cost a pretty penny if your landlord decides to spend a lot on the upkeep of the property. It is good to have the area looking nice, but try to negotiate a cap just in case spending gets a little out of control
3
Subletting is a must! You never know what could happen, so always make sure there is a clause in the lease that allows you to sublet to another business without paying a penalty.
4
Try and put something in the lease to guarantee that the major operating equipment like the heating and air conditioning units are not only in working order, but are covered by the landlord if there is a problem for at least the first year or two. The worst thing that could happen is to have the AC break right after you move in. That is an unexpected expense that you shouldn’t have to pay for considering you have barely occupied the space.
5
Look into the terms regarding external building repairs. If you do not make sure you are somewhat protected, you may end up paying your proportionate share of replacing an entire roof.
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