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Questions You Need To Ask Before Signing A Commercial Lease

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. It is crucial that you understand the lease terms before putting your signature on it. The lease terms will have an impact on how you conduct yourself and your business in the commercial property. Make 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 important questions that you need to ask yourself before signing any documents.


Have You read The Entire Lease Agreement In Detail?

You will need to read word for word to ensure you’re not missing anything. It will be a long document that can be very boring to read but as they say, the devil is always in the details. Your landlord will in most cases use “boilerplate” terms which you will find in most leases. Make sure there are no contradictions between the special language and the standard language you agreed upon. It will be disastrous to assume that everything is in order with the lease agreement as there could be numerical errors which 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. There is always a chance to negotiate even you’ve agreed on the details. 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?

The word “CAM” is used in most rental leases agreement 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 for a long time. You’ll be surprised that you’re paying for landlord’s marketing endeavours without even knowing. Another thing that you will need to discuss is the administration fee. The CAM terms should be negotiable if you’re dealing with a flexible landlord.



Can You Assign The Lease To Someone Else?

Make sure you’re checking if the landlord has the right to terminate the lease if you decide to assign it to someone else. There are situations where you will find out that the space you’re paying rent for is too big for your value. This could mean assigning the lease agreement to someone else which might not augur well with the landlord. Your sale will be of no value if the landlord has the right to terminate the agreement should you decide to reassign the lease. Ask the landlord to remove the provision if possible before signing the documents.


Can You Get A Sublease?

The practices involve in subleasing are the same ones with reassigning a lease. A sublease could be described as another business entity that is within your lease. You’re the one responsible for paying for the lease while the other business contributes a portion of the cost depending on the agreement. Not a lot of landlords will agree to sublease agreements but there are situations that will necessitate sharing costs. That is why it is important 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 as opposed to resorting to litigation. You should have the right to select the arbitrator so that there is fairness when solving disputes.


Do You Have A Legal Business Structure In Place?

In order 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 go through the lease. Let them know your requirements and expectations as they will be able to negotiate on your behalf which will help in cutting down the costs.

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