A commercial lease can feel intimidating, especially if you don’t deal with real estate regularly. Carefully reading your lease is crucial to ensuring you’re getting the best deal. While all parts of a lease are important, certain terms and clauses deserve extra attention. Here’s what you need to focus on:
Rent and Common Area Maintenance (CAM)
You don’t want any surprises when it’s time to pay your first month’s rent. Carefully review the rent terms. Are there additional fees beyond the rent? When is the rent due, and how must it be paid? What are the penalties for late payments? Also, check the details of the common area maintenance (CAM). What exactly does it cover, and what doesn’t it include? Understanding these points helps you avoid unexpected costs later on.
Right of First Refusal
If you love your office space, you’ll want the option to stay when your lease expires. The Right of First Refusal clause gives you the opportunity to renew before the landlord offers the space to new tenants. Make sure this clause is clear in your lease to protect your future.
Definition of the Premises
This section outlines exactly what space you’re renting. Ensure the lease accurately states the office’s square footage. If the landlord has promised access to shared areas—like restrooms, reception areas, or break rooms—these should also be clearly listed. Verbal promises are not enough; everything must be in writing.
Subleasing and Assignment
Business needs can change unexpectedly. A Subleasing and Assignment clause allows you to rent out part or all of your space to another tenant if necessary. Make sure your lease offers flexible subleasing terms to give you more options if your situation changes.
Use and Exclusives Clause
Some leases restrict what type of businesses can occupy the building. Be sure to check if these restrictions will limit your business growth. You don’t want to be blocked from expanding into a new industry or niche due to the lease. Additionally, the Exclusives Clause can protect you from competitors moving into the same building, which might be crucial depending on your line of business.
Maintenance Clause
What happens if something in your office needs repair? The Maintenance Clause defines who is responsible for maintenance and repairs. Make sure it clearly outlines whether you or the landlord is responsible for handling maintenance costs and arrangements. Clear responsibilities can save you from future disagreements and headaches.
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