Questions You Need To Ask Before Signing A Commercial Lease

It might not be possible to reverse the changes once you’ve signed a commercial lease agreement, as it is a binding document. You must understand the lease terms before putting your signature on it. The lease terms will impact how you conduct yourself and your business in the commercial property. Ensure you’ve negotiated the best deal possible before putting pen to paper. If you’re looking for commercial real estate for lease, here are some essential questions you must ask yourself before signing any documents.

Have You Read The Entire Lease Agreement In Detail?

You must read word for word to ensure you’re not missing anything. It will be a lengthy document that can be very boring, but as they say, the devil is always in the details. Your landlord usually uses “boilerplate” terms, which you will find in most leases. Ensure there are no contradictions between the unique and standard languages you agreed upon. It will be disastrous to assume everything is in order with the lease agreement as there could be numerical errors that could alter the meaning and the repercussions involved.

Did You Get The Best Deal Possible?

It is never a done deal unless you’ve signed the lease. Even if you agree on the details, there is always a chance to negotiate. You can create a list of terms and provisions you don’t like and bring it up with the landlord before you sign the lease. It won’t be a surprise if you get a response that the landlord is willing to address your concerns.

Do You Understand The CAM Terms?

“CAM” is used in most rental lease agreements and refers to “common area maintenance.” There should be an allocation of the percentage fee that you’re responsible for. The fee is determined by the building that you’re renting. Make sure that the overall size of the building is taken into consideration when coming up with the fee.

The CAM section can be very confusing, even if you’ve been renting commercial spaces long. You’ll be surprised that you’re paying for the landlord’s marketing endeavors without knowing. Another thing that you will need to discuss is the administration fee. The CAM terms should be negotiable if you deal with a flexible landlord.

Can You Assign The Lease To Someone Else?

Ensure you check if the landlord has the right to terminate the lease if you assign it to someone else. Sometimes, you will discover that the space you’re paying rent is too ample for your value. This could mean assigning the lease agreement to someone else, which might not resonate well with the landlord. Your sale will be useless if the landlord has the right to terminate the agreement should you decide to reassign the lease. If possible, ask the landlord to remove the provision before signing the documents.

Can You Get A Sublease?

The practices involved in subleasing are the same ones as reassigning a lease. A sublease is another business entity within your lease. Depending on the agreement, you’re responsible for paying for the lease, while the other business contributes a portion of the cost. Few landlords will agree to sublease agreements, but some situations necessitate sharing costs. That is why it is essential to negotiate before you enter the building.

Is There An Arbitration Clause In The Lease?

The purpose of an arbitration clause is to provide avenues for solving disagreements for both parties. The arbitration clause states that the issues will be resolved using an arbitrator instead of litigation. You should have the right to select the arbitrator so there is fairness when solving disputes.

Do You Have A Legal Business Structure In Place?

To protect yourself as an individual, you need to ensure you have a proper business in place with all the necessary documentation. There should be binding documents to show that the lease has been approved by the board of directors in your company. You may consider hiring a lawyer if you don’t have the time to review the lease. Let them know your requirements and expectations, as they can negotiate on your behalf, which will help cut costs.

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