What Should I Look for in a Commercial Lease Agreement

When it comes to starting a business, one of the most important decisions you will make is choosing the right location. Once you have found the perfect space, the next step is signing a commercial lease agreement. While this may seem like a straightforward process, it is crucial that you thoroughly review and understand all of the terms before signing on the dotted line. In this article, we will discuss some of the key items to look for in a commercial lease agreement.

1. Lease Term: The lease term refers to the length of time that the lease will be in effect. This can range from one year to ten years or more. It is important to understand the length of the lease term, as it will impact your business`s financial planning and growth potential.

2. Rent: The rent amount and payment terms should be clearly outlined in the lease agreement. Be sure to ask if the rent includes any additional fees, such as property taxes, insurance, or maintenance costs. Additionally, determine if there are any rent escalation clauses that could result in increased rent payments over time.

3. Security Deposit: Most landlords will require a security deposit when signing a commercial lease agreement. This is to protect the landlord in case of damage or non-payment of rent. Make sure you understand the amount of the security deposit and the conditions under which it will be returned.

4. Maintenance and Repairs: The lease agreement should specify who is responsible for maintenance and repairs to the property. Generally, landlords are responsible for major repairs to the building`s structure and common areas, while tenants are responsible for maintaining their rented space.

5. Permitted Use: The lease agreement should outline the permitted use of the property. This includes what type of business activities are allowed and any restrictions on how the space can be used. If you plan on making any changes to the space, such as adding signage or altering the layout, make sure to get approval from the landlord in writing.

6. Insurance Requirements: The lease agreement should specify the insurance requirements for the tenant. This may include liability insurance, property insurance, and workers` compensation insurance. Make sure to review these requirements with your insurance provider to ensure you are adequately covered.

7. Renewal Terms: The lease agreement should also outline the renewal terms. Determine how much notice you must give the landlord if you wish to renew the lease and if there are any automatic renewal clauses. Be aware of any terms that could result in a rent increase upon renewal.

In conclusion, signing a commercial lease agreement is a critical step in starting a business. Before you sign, make sure to thoroughly review and understand all of the terms. If you have any questions or concerns, do not hesitate to seek legal advice. By doing your due diligence, you can ensure a successful and profitable renting experience.