Factors to consider before signing a commercial lease
Your office building plays an important role in the success of your business; it represents the face of your enterprise, and reflects its professional attitude and organizational culture crucial for the success of your business. While finding a suitable office space is a challenge, your job does not end on finding the perfect physical address for your business, you will have to exercise due diligence in negotiating terms and while signing a commercial lease.
As a legal document, commercial lease papers contain many complex legal terms that might sound Greek and Latin to even those with some knowledge of the real estate terminology. Signing commercial lease as an individual business or a company without carefully understanding the terms mentioned in these documents will impact your business and result in loss of time and resources for your business.
Well, to avoid any legal issues in the future it is better to have an understanding of what to look for in a commercial lease before you sign the document. But, not to worry, you may refer to the many leasing commercial property guides so you understand the basics of leasing to the very complex issues including legal options in the event of any disputes with the landlord.
If you have plans to lease office or commercial space for your business, here is a quick leasing commercial real estate checklist.
Premises: Before you start the quest for suitable office space you need to have answers to the most common renting a commercial property questions such as the space required, mostly expressed in Sq. Ft., and the market rate for such area, etc., so you can negotiate better with the landlords. Lack of clarity about the area of the premises and terms with the party, landlord, is the most common cause of disputes between the parties.
Terms: Terms and conditions is an important section in an agreement, so also a commercial property lease document should spell out all the terms and conditions in an unambiguous manner. Details such as the commencement of contract, termination of contract, including specific dates, conditions for early termination, and any rules of arbitration thereof need a clear mention.
Rent: The most important things to consider before leasing commercial property are money related, as issues relating to money not only strain relationship between the parties, but it may also impact your business negatively. The lease document should clearly specify the amount of rent, due date, penalty for late payments, deposit amount, if any interest would be paid on such deposit, etc., the rate and time period for increase in rent.
Common Area: Most commercial properties house many offices, as such it becomes important to determine beforehand the common areas and certain common facilities such as lift, parking space etc. The commercial lease should also specify the extent of your responsibility in the maintenance of such common areas and facilities.
Maintenance: The upkeep of the premises is important for your business and is the responsibility of both the tenant and the landlord. Lack of clarity in understanding the responsibility of each party in maintenance of the property results in disputes. The commercial property lease should clarify any questions in relation to the repairs and maintenance of the property. Make sure that the lease agreement offers some time to repay for the damages, if any, to the property.
Misuse of the property: If you as a tenant of the commercial property misuse the property, the landlord under the law can have your business evicted from the premises. Even if you do not use the property for more than 6 months the landlord may file for suit for eviction of your business, for example, the rent control act of Bombay under section 13 offers this right to the landlord.
One important tip for leasing commercial property is that you negotiate on all factors, to ensure that the lease is not completely against you, the tenant, and that it offers you some space and time to adjust to the sudden and unexpected changes in your business or the landlord’s interests.