Congratulations on opening or expanding your business! Entering a new commercial lease is a big deal, and definitely not a decision to take lightly. To ensure that you make the best-informed decisions, there are a few things that you should know going in.
It is important that you have an understanding of real estate law and how it affects your business. There are a few leasing laws, rules and stipulations in place. As such, there are certain things that you should know about your commercial lease.
It differs from a residential lease
Residential and commercial leases vary in a few key ways, which the Bureau of Real Estate details in the Real Estate Reference Book. For instance, commercial leases have fewer consumer protection laws. Commercial property owners can customize their leases to suit their needs, and they have no caps on the amount they may charge for a security deposit nor any tenant privacy stipulations. Most owners choose to provide long-term contracts and implement stiff penalties for breaking the lease. Though these terms may not all be favorable, the fluidity of the contract allows more room for negotiation than in a residential lease. With proper negotiating skills, both parties may come to an amicable agreement.
Terms to look for
Being that property owners are able to basically create their own lease terms, it is critical that lessees read the contracts in their entirety and understand the stipulations. There are a few key terms to look for, including:
- Length of the lease term
- Notation of space being rented
- Additional payments due outside of rent
- Security deposit and its conditions
- Maintenance of the property
- Subleasing options or restrictions
- Dispute mediation or arbitration
- Lease termination
These are just a few of the key terms to examine. If you have any specific concerns, be sure to discuss them and get them in writing.
Altogether, you want to make sure that the lease and its terms meet the needs of your business. By taking the time to review and negotiate the lease, you can set yourself up to be in the best position for success.