Did you know that there are essential distinctions between leasing a residence and leasing a building for a business? What’s more, there are critical things to know before you sign a lease.
It’s time to begin researching to learn everything you need, such as the lease duration, how you can get out of it, and who is paying property taxes are just a few. To learn the five things you should consider before signing a commercial lease, keep reading below.
- The Property and Parties
Your lease will specify some primary terms, such as the landlord, the tenant, and the premises. All names in the lease and the address of the property must be provided correctly and spelled properly. If you have a legal business entity like an LLC, you will want to have the entity named rather than you personally.
Enterprise architecture services are helpful for business entity as the leaseholder protects you should anything go wrong.
- The Term of the Lease
How long you are entitled to occupy the space or property and required to pay rent is called the lease term. It is common for a commercial lease to be multiyear, whereas a residential lease is generally annual.
- What’s Included When Leasing a Building for a Business?
The monthly rent cost is generally just the tip of the iceberg. There can be many other things included or in addition to the base cost of renting the space.
Are utilities included, or what utilities do you need to pay? Will you be paying taxes or does the landlord handle it? Are the cleaning, trash collection, snow removal, or other public area services paid by the landlord?
It’s essential to ask for average monthly historical costs for things not included in the rent.
Planning for a time when you may have financial constraints is also critical. Check the lease to know if subleasing will be possible if you ever need to share your space for economic reasons.
If you sell your business, can you assign your lease to the new owner? These clauses are often not included, so go through the lease thoroughly or have your lawyer do it.
- Lease Termination
If you need to end your lease prematurely, what are the penalties? If you or your partners think it is excessive, try negotiating for it to be reduced. The lease agreement should include everything you and the landlord have discussed before you sign it.
Some examples are the rent, any related expenses, signage, deposit, and termination. A lawyer or advisor that you pay for this service will ensure that all the bases are covered.
What’s Next for Leasing a Building for a Business?
Moving your business out of your house to its own space can be challenging. When leasing a building for a business, the lease contents should benefit you and your landlord.
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