A commercial lease can seem intimidating, especially if you don’t deal with real estate regularly. However, reading your lease carefully is crucial to ensure you secure the best deal for your office space. While every part of the lease is important, certain terms and clauses need extra attention.
Rent and Common Area Maintenance
To avoid any surprises when it’s time to pay rent, it’s essential to review the rent terms thoroughly. Ensure you understand any additional fees beyond the base rent. When is the rent due, and how must it be paid? Familiarize yourself with penalties for late payments and check how much you’ll need to pay for common area maintenance. This fee should also clearly define what it covers, so there are no surprises later.
Right of First Refusal
If you want to remain in the office space when your lease ends, you should ensure a right of first refusal clause is included. This clause gives you the first opportunity to renew your lease before the landlord offers the space to other potential tenants. Securing this right can be vital if you plan to stay long-term.
Definition of the Premises
The definition of the premises outlines the exact space you’re renting. Make sure the square footage of your office is correct in the lease. Additionally, if your landlord promised access to shared facilities like restrooms or break rooms, these areas should also be clearly mentioned in this section. Verbal promises should be written in the contract to avoid confusion.
Subleasing and Assignment
If your business needs change, the ability to sublease or assign the space to another tenant can help reduce costs. Ensure your lease includes flexible subleasing rights, so if your business outgrows or no longer requires the office, you have the option to lease it to someone else without breaking the agreement.
Use and Exclusives Clause
It’s important to understand whether there are restrictions on the types of businesses allowed in the building. Will these limitations prevent you from expanding into new sectors in the future? Additionally, check if the lease protects you from having competitors move into the same building. This exclusives clause can be essential in protecting your business interests.
Maintenance Responsibilities
Who is responsible for covering repair and maintenance costs? The lease should clearly outline who pays for maintenance and who arranges repairs. Understanding this before signing the lease will help prevent future misunderstandings or costly disputes.
Conclusion: Protect Your Business by Reviewing Key Lease Terms
Carefully reviewing your commercial lease is essential to protect your business and avoid complications. Pay special attention to the rent, subleasing rights, maintenance clauses, and other key terms. It’s always worth negotiating or clarifying lease terms before signing to secure the best outcome for your business.
Even after outlining all the information above, writing a letter of intent (LOI) can still seem daunting. That’s why the Leveraged CRE Team at Commercial Properties, Inc. is here to help locate commercial space for lease and assist in using a letter of intent to land such space. Contact us at (480) 330-8897 or send us an email at request@leveragedcre.com.
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