5 Essential Things You Need to Know Before Signing a Commercial Lease
Fully understanding the material terms before deciding to sign a commercial lease is crucial for your business; there is no doubt about that. It is essential to spend a considerable amount of thought, analysis and strategic considerations when making this decision so that it doesn’t backfire on your business or you personally in the long run. Obtaining advice from competent counsel who has significant commercial lease experience is certainly advisable.
There are a couple of repeating mistakes that business owners make when signing their first commercial lease, but this doesn't need to be the case for you. Here are the top 5 common mistakes you should avoid when signing a commercial lease.
#1 Get in Touch with the Landlord
The first major mistake that we see business owners making when signing a commercial lease is not getting in touch with the landlord. It's essential for you to know what the landlord is like because they have would generally have the power to determine your leasehold experience. As a general guideline, you want the landlord to be flexible and open to changes that benefit both parties. In addition, it's always a good idea to get the landlord's phone number so you have a direct contact in the event of an inquiry or emergency.
#2 Operation Restrictions: Permitted Use and Exclusive Use
If you are planning to open a business such as a restaurant or bar, it's critical to ensure that the property and commercial doesn't have any operating restrictions such as zoning and permitted/exclusive use provisions. For example, most bars generate the bulk of their profits after midnight. This can be a problem in some areas where neighbors can call the police for public disturbance. You also need to complete due diligence to access if there are any state licensing or city government agencies from whom you need to receive approval for operation.
#3 Verify All Details of the Commercial Lease
Verifying every detail on documents that you sign should be standard procedure, especially for commercial leases where a single sentence or word can have substantial implications in the long run. If commercial leases seem overwhelming and complicated because of the legal terms they use, you should consider counsel from a real estate attorney who is familiar and has specific experience with these transactions.
#4 Multiple Points of Access
It’s advisable to push for multiple points of access to the leasehold Premises. Let's say, for example, that you will be operating on the upper floor of a mall or business center. It's essential to have multiple points of access. The elevator or the escalators can malfunction at any time. That's not all. It's also a good idea to have one point of entry dedicated to clients and another for employees or daily supplies. These terms should be negotiated in your Commercial Lease.
#5 Contact the Neighbors
We previously mentioned that you should get in touch with the landlord. However, making sure that the neighbors are happy with the building as well as your business is almost as important. If you are signing a commercial lease in a mall or business center, the other businesses shouldn't be direct competitors that will get in the way of your success. Although, it's best to avoid asking the co-tenants too many questions because they are not likely to reveal information about their commercial leases, and the landlord might take it the wrong way. Negotiating exclusive use provisions with the landlord can also provide great benefits to your business.