When entering into a commercial lease, it's important to look very carefully at all of the small print to determine whether the contract is perfectly fit for your requirements. Many people are so keen to get on with the work and secure the space in the first place that they often gloss through some of these details and sign on the dotted line. What are some of the areas you should look at in particular that can often prove to be a problem down the road?
Reasonable Rent Conditions
The owner of the property is, of course, in business to make money. They will often draw up the lease to make sure that they are favoured and might want to introduce a clause that escalates the cost of the rent in the future. It's essential to look at this carefully and figure out whether this fits in with your long-term plan. Do they tie a rent escalation to the cost of living index, or is it subject to a fixed percentage? Make sure that you err on the side of caution here and only agree to a contractual rent increase if it is within your budget.
Pre-Existing Maintenance Issues
Next, determine who is responsible for repairs or maintenance. The landlord should set this out unequivocally, and you want to be sure of your ground in the event of an unforeseen issue. Indeed, they may ask you to inspect the premises before you take possession, but what happens if it is subject to an undiscovered environmental issue of some kind? Was this condition in place at the time that you took delivery or not, and how is this covered within the maintenance clause?
Mergers or Acquisitions
In the future, you may find it advantageous to sell your business to a third party or to bring in a partner that has equal ownership. How is this covered in the lease? Are you allowed to assign the contract to another entity or not? Often, this would be against the rules in an attempt to prevent you from sub-leasing or bringing in an entirely different tenant together. In this case, you may need to add or modify the clause to make sure that you include any potential merger or other favourable business agreement.
Third-Party Advice
These are just some of the areas where problems can arise and where you need to be somewhat cautious. Make sure that you bring in a commercial lawyer to have a look at your lease before you sign it, and they may be able to warn you of any stumbling blocks.