Often small business owners or those looking to start a small business will lease commercial property on which to run their business. Commercial property leases are legally binding contracts between tenants and landlords that allow the tenant to use the property to run a business for a set time period.
Signing a commercial lease usually takes two parts. First you (the tenant) sign the offer to lease and then, after negotiations, you sign the lease with the details. This process, in particular the negotiations, can be complicated, especially for a first-time business owner.
That’s why it’s always important to do your research into the particulars of commercial leases before signing anything. It’s also always advisable to seek legal advice on the details of the lease.
Here are six things to consider (and research) when signing a commercial lease:
The term of you lease will be either a fixed or renewable time period. This clause includes the terms for renewal. Do your research into what kind of term will work best for you and your business when considering
Obviously, how much you pay for the space to run your business is very important to you as well as to the landlord who owns the space. That’s why the rent clause is one of the most important, and most negotiated, parts of the commercial lease. There are different rent calculations for different types of commercial leases that range from paying a flat rate base rent, to base rent and a portion of your sales, to base rent and taxes, and more.
- Space and Services:
This term is especially important if the commercial space you are leasing is within a complex where more than one business exists. Before signing your lease, find out what common spaces or services are included in your rent. These could include washrooms, lobbies, parking, heating and air, cleaning, security, and snow removal or lawn care.
- Leasehold Improvements:
Chances are you will have some equipment to install in your new business, and you might even want to make some changes to the building. If your landlord allows you to make changes, it will be important to understand the terms. You’ll have to know if any fixed assets you ad belong to you or if the landlord will keep them in the building after you leave, and if you will have to restore the building to it’s original state on leaving. A commercial lease lawyer can help get you the improvement terms that best suit you.
If your business expands before you lease is up, it may be necessary to sublet the commercial property you are currently in in order to move to something larger. It’s a good idea to consider working a sublet clause into your original lease so there won’t be any issues later on when the issue arises.
- Escape Clause:
No one wants to think about his or her business failing, but when you’re leasing commercial property, it’s better to be safe than sorry when it comes to getting out of the lease. If for some reason you are unable to run the business anymore, you’ll want to get out of the lease of the property. That’s why it is advisable to have your lawyer negotiate an Escape Clause into your lease, so if the situation does arise you’ll have an easier time finding a solution.
You may also want to think about taxes, utilities, signage rules, damage and destruction, repairs, insurance details, and more. With all of these things to think about, it’s a good idea to seek legal advice on the terms of your contract before signing. Juriscorp Law Offices has the knowledge and experience to make sure you get the best representation on your commercial lease.