Before You Sign A Commercial Real Estate Lease, Some Things To Know

commercial real estate lease contract

When signing a business lease, the key is doing research. At the very start, you should research the owner of the building, the landlord, the laws, environmental elements and so on. You should be aware of how much you have to pay and what will that cover, how much the rent will cost every year and how much will it increase, what are the extra payments and so on.

Some leases have them and they may include utilities, insurance or maintenance while others will have it all in one sum. You should establish how your lease will be transferred if you move or your business closes. The world of commercial real estate is complicated and you need to know your way around it if you want to end up on the winning side. You need to find the appropriate space and know that it’s going to be beneficial for your business. This is a very important element of any business and it should be treated as such. There is a lot of planning to be done and many terms to look over.

Here are some things you need to research and know about before you sign that lease.

Understand the area

Commercial Real Estate

When signing the commercial lease for your business and the building, you should do extensive research. When looking for a new property, especially so if you plan on selling a product or a service from there, you should analyze that area and see if there is a potential for people coming and buying from you. Location is everything here and you need to find the one that will be approachable and attractive for your clientele. In this case, take your time to find just the right building. Remember that you will be stuck with the place for a while so you better choose wisely.

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Research the landlord and owner

One of the most important aspects of your research process is researching the landlord and the owner of the building. Sometimes the landlord may not be the real building owner, so you need to have contact and research both of these people to get the full picture. It’s a good practice to find out as much as you can about them as you are entering a partnership of sorts and you want to make sure that they are a good option for you as well. You also need to know what their finances are like. The landlord needs to pay the building owner regularly as well as to the bank because you don’t want to end up evicted from them building because someone else failed to pay the bills.

Research zoning laws

Another important aspect to look into are the laws, specifically the zoning laws in the area where the building is. While your landlord or building owner may say a space is great for a restaurant, you need to make sure that it really is according to the law. The owner or a landlord may think that a space is great for a certain type of business but then it can turn out that the space is not good for that type of business. Avoid legal headaches by checking this out in advance.

You should also check the laws concerning nuisance and the environment. For example, many leases have points when it comes to noise, smell and sound of the equipment. These laws are very important and you need to research what the basic laws are before you sign anything. These can often be missed by landlords and they can be used against your business later. You need to research this thoroughly.

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The terms

When it comes to reviewing your lease, you should keep some basic aspects in mind. The rent structure is the most basic and the most important aspect of any lease. You should check how much you have to pay every month and how much your rent will increase every year. You can then determine the budget and understand if your business can survive in that space, with that amount as rent. The terms of the lease are very important as well. Consider the advantages and the disadvantages of getting a long term lease or a short term lease. For instance, a long term lease can be good for opening a business in a growing area but a short term lease will give you plenty of flexibility.

It’s important to know what your obligations are every month and what you need to do to pay all of these things. Ask about:

  • Property taxes
  • Insurance
  • Repairs
  • Maintenance
  • Parking
  • Local laws
  • Utilities

When you establish these basic term and pricing structures, it’s important to get into some other details. Your lease will vary based on the state but these are statutes you should be aware of.

  • Transfer structure
  • Personal exposure
  • Holdover rent
  • Non-disturbance agreement

Author Bio :

Ashley Halsey is a professional real estate specialist at Lucky Assignments who has been involved in many projects throughout the country. Mother of two children, she enjoys traveling, reading and attending business training courses.