As a successful business owner, you’re enthusiastic about your work and business. But when you find the perfect new office space, it is wise to curb your enthusiasm before rushing into signing a new lease as the long term consequences of a lease can be costly. Here are some things to consider before signing a commercial lease.

Get Your Lease in Writing, Read It and Understand It
A written lease is critical to protecting your rights. While the language is dry, lengthy and boring with details, legal phrases and terms, skimming over it and assuming it has just the “standard stuff” is naïve. Thoroughly read your lease and make sure you understand leasing terminology. Smart tenants have saved themselves thousands of dollars for doing so.
In most leases you’ll see the acronym CAM (Common Area Maintenance) mentioned quite frequently. The CAM you are responsible for should be based on the percentage of the building you’re renting rather than how much of the building is rented. Unfortunately, too many tenants assume that all they have to pay is rent based on the square footage when in reality there are additional charges for CAM that include water, garbage pickup, grounds maintenance and some utilities.
Additionally, landlords may also charge a percent of your sales level. Find out the percentage and when it becomes effective. Make sure you aren’t paying for the landlord’s marketing efforts or legal fees associated with negotiating other leases. Also make sure you aren’t charged for any administration fees of more than 3% that pay for the landlord’s employee benefits or build-out costs for other lease units.
If you don’t understand the leasing terminology, pay an attorney who can help you to understand the lease and make suggestions for changes that will protect you. Don’t assume the landlord correctly entered the terms you verbally agreed on. Check the start and end dates of the lease. Committing yourself to a long term may be detrimental if the location doesn’t work out or you outgrow it. On the other hand, if the location works out well, you’ll want to stay longer. While the term of the lease is usually negotiable, be on the look out for rent escalation as you don’t want your rent to suddenly increase unexpectedly at the end of a period.

Understand Your Responsibilities and the Landlord’s
Don’t assume that the landlord is responsible for all repairs because he owns the building. In many cases the lease mandates that the tenant is responsible for all repairs and maintenance. Some leases place repairs for capital expenditures like heating, air conditioning and plumbing on the tenant, specifying limits concerning the dollar amount for which the tenant is responsible. Remember you can’t withhold rent even if the landlord refuses responsibility to make repairs specified and agreed upon in the lease. You should also know what’s entailed with the eviction process. Have an attorney explain your legal rights as some leases state that the landlord can lock you out of the space without going to court if you are in default.

Many terms of a lease are negotiable and negotiation isn’t over just because you’re holding a copy of the lease (as long as you haven’t signed it yet!). As you’re reading it over, make a list of all the provisions that you don’t agree with and send the list to your landlord. Many tenants were pleasantly surprised by how much their landlords were willing to change. Savvy tenants negotiate for a reasonably short lease with an option to renew. They negotiate for a CAM Stop lease where you only pay for the increase in CAM and property taxes above your initial lease year, taking much of the “mystery fee” out of the rent. In some cases they’ve asked for a cap on the CAM so it can’t increase anymore than a certain negotiated percentage. They’ve also negotiated assigning their lease should they sell their business. The worst that can happen during negotiations is the landlord saying no and even then you’re in the driver’s seat as you can still walk away.
When it comes to finding the perfect location and signing a lease, business owners are wise to curb their enthusiasm. Understanding lease terminology, tenant and landlord responsibilities and negotiating are crucial before signing a lease.

Always be aware of fees and legalities before signing an office rental space lease.

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