The flexibility, affordability and convenience of leasing a commercial property can give your business a competitive edge. However, it is pivotal to understand the terms of a lease agreement before putting pen to paper. Remember, the success of your business is tied to the terms of your lease.
You do not want to be entangled in costly, time-consuming complications that can affect business operations because you failed to thoroughly review and understand the terms outlined in your lease agreement. Below are some of the essential clauses you should carefully look at in the legally enforceable agreement.
Lease duration and renewal options
Examine the terms of the lease agreement; is it a fixed period or a more flexible arrangement? Additionally, understand any renewal options if any. Knowing the duration and potential for extending the lease can help you make long-term plans for the business.
Rent structure and other costs
The lease agreement should specify the amount of rent, its due date, payment method and any applicable late fees or penalties. Clarify how rent increases are determined to anticipate future financial commitments. Remember to look beyond the base rent. Check whether there are any additional recurrent expenses or fees required of you.
Maintenance and repairs
Clearly define maintenance responsibilities from the onset to avoid disputes. Understanding the party responsible for repairs, upkeep and related costs can help prevent disagreements over the condition and maintenance of the leased space.
Assignment and subletting
Commercial leases often include provisions for the assignment and subletting of the property. Understand the conditions under which you can transfer the lease to another party or sublet a portion of the space and if you require landlord approval.
Most importantly, consider seeking legal guidance before entering into a commercial lease agreement. Like with any other legally binding contract, the devil is in the details, and you do not want to overlook critical clauses that may have significant implications for your business.