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The terminology of your commercial lease matters

California small business owners know how difficult it can be to find the right space from which to operate a company. Finding the right place at a price that works for the budget may tempt a business owner to move forward as quickly as possible, but it is prudent to be careful and cautious regarding the terms of a commercial lease. It is beneficial to first understand the different types of commercial leases before signing.

The type of commercial lease matters significantly for a business. It can affect payment amounts and various other factors. The terms of many commercial lease are negotiable, and it is possible to work for the terms and type of lease that will work best for the specific company and minimize exposure to financial risk.

A gross lease is a lease where the rent will cover all expenses, such as taxes, maintenance, utilities, janitorial costs and more. In a modified gross lease, the landlord will pay for expenses such as insurance and maintenance with the rent payments, and the tenant will pay for other things, such as janitorial fees and utilities. With the various types of net leases, the landlord charges a base rent fee, plus additional charges for normal costs, such as insurance.

When considering any type of commercial lease for a California business, it is in a business owner's interests to carefully review all terms. This includes understanding how much rent payments will be, the frequency of payments, additional costs and other expenses than could impact a company. In many cases, it is beneficial to seek guidance before signing a lease for a commercial property. 

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