User Review( votes)
Avoiding the Potential Pitfalls in a Commercial Lease
Unforeseen costs and other misfortunes can hit a business that negotiates or signs an office lease with legal guidance. From initial construction-related costs to maintenance costs and later capital improvements, there is a long list of hidden costs that add up quickly.
It is, therefore, essential to consult with a competent attorney from a reputable law firm such as Modern Law. Such professionals understand the lease law perfectly, have been handling these issues for quite some time, and they present you with an opportunity to negotiate a fair lease with better terms and conditions. Here are some of the pitfalls you should avoid when negotiating a commercial lease for your business.
#1. Negotiating a lease while in ‘panic mode’
Probably you will be evicted from your current short-term lease because your landlord intends to put in a chain store or sell the property. Or, your company is growing very fast, and you must lease a bigger space to accommodate your customers. Sometimes, when opening a time-sensitive institution such as school, you might feel pressured to get the facility up and running within a month or two. Such pressure and panic can impact your ability to negotiate a better lease.
Besides, you shouldn’t go into the negotiations alone. Seek the help of an experienced tenant rep broker. These experts have a better understanding of the markets and what you may be looking for. Brokers work in unison with attorneys, and this can help you avoid costly mistakes and also get you a better lease.
#2. Failure to insist on proportional concessions from your landlord
Most landlords ask their commercial tenants to sign long-term leases which are usually five years, ten years, or even more. In return, the lessee must ask for specific items in relation to the period of the lease. These items include free rent for a certain period or a lessee fit-up at the lessor’s expense.
#3. Failure to pay attention to price trends
Does the lease agreement indicate that the lessor can reevaluate the terms during your lease period and alter the cost of water, electricity, and other related items? Get to know the price fluctuations before signing the lease. Remember, the rates might be reasonable at the time you’re signing the lease, but find that your lessor has doubled or even tripled the rate within a year or two.
#4. Ignoring real estate taxes
Get to know the specific percentage of the property’s real estate tax you will be responsible for. Be sure to learn the details of the proportion of the tax you will be paying and what will happen in case the rates go up. Remember, some landlords can increase the lessee’s proportion of tax beyond the tax hike rate.
The bottom line is, do your homework before you sign any commercial lease. It is also essential to get a good broker and an experienced attorney to help you understand your lease agreement better before you sign it.