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4 questions to ask yourself before you sign a commercial lease

On Behalf of | Sep 3, 2020 | Real Estate Law

You started your business at your kitchen table, moved it to the garage when it got bigger and now — hurrah! — you’re just about to sign your first commercial lease.

Before you pick up that pen, however, you need to realize that commercial leases, unlike residential ones, offer very little protection for renters. Since you’re in business for yourself, it’s assumed that you’re savvy enough to know what you’re bargaining for (even if you aren’t).

Don’t sign anything until you’ve asked yourself the following questions:

  1. Do you understand all of the terms used in the lease? Commercial leases have terms like CAM (common area maintenance) fees, convenience clauses, recapture clauses, use clauses, rent escalations and more. All of those can affect your bottom line, so make sure that you fully understand what every word on the lease means.
  2. Did you read the whole lease? The longer the lease, the more likely it is that the landlord has inserted a few clauses that tilt everything in their favor. Don’t skip over the fine print or trust a landlord who says that a lease is just “standard” as they urge you to commit.
  3. Have you negotiated for better terms? In business, everything is negotiable — especially a lease. You can generally expect a potential landlord to offer you the lease they want, not the lease they expect to end up getting from you.
  4. Have you talked to an attorney? A commercial lease is a very big deal, and you could be stuck with its conditions for a long time. Don’t make the mistake of being overly trusting. A landlord with nothing to hide will understand that you want your attorney to review the lease before you agree to it.

A bad lease can really damage your ability to grow your business, so don’t take chances.