Lease Property
Lease Property
Are you leasing your first commercial space or your next commercial space? Is your lease renewal coming up? Many tenants do not realize they have access to representation too – the real estate broker for the property is working for the landlord! Please consider the following imperative points before you sign any lease agreement.
- Insurance – All commercial leases will stipulate a specific amount of insurance your business must carry to operate within the leased premises. The landlord must be listed as the certificate holder and/or additional insured on the policy. If you do not have the minimum insurance required, you are in default of your lease agreement. Be sure this amount makes sense for your business.
- HVAC – Most commercial lease agreements require the tenant to have an active preventive maintenance agreement with a licensed and landlord approved mechanical contractor. Many leases require the tenant to pay for any additional HVAC repairs in addition to maintenance. If you do not have an active preventive maintenance agreement in place, you are in default of your lease agreement.
- Maintenance – The landlord is responsible for the maintenance of the structure of the building including the roof, supporting walls, and foundation, as well as maintenance of common areas. Most leases require the tenant to be responsible for the interior of the space as well as any door, window, or lock repairs for the leased space.
- Additional Rent/Common Area Maintenance Charges – Is the lease you are considering a Triple Net Lease or a Gross Lease? Are you responsible for reimbursing the landlord for a pro-rata share of operating expenses and/or common area maintenance charges? What is included, what is excluded?
- Right to Relocate – Can the landlord relocate your business prior to the end of your lease agreement? In many cases, they can! What are your choices? How does this impact your business?
- Notification Period – How long before your lease expires must you notify the landlord of your intentions to renew? Not providing timely notice can have a significant impact on some of the terms in your lease agreement.
- Option to Renew – Does your lease contain an option for you to renew your lease at pre-determined terms? If so, your notification period will be extremely important to take advantage of this valuable option.
- Holdover – If you have to stay in your leased space after your lease expires and you have not been able to negotiate a renewal, is there a holdover rent rate? This rate can often times be 150% or 200% of your negotiated rental rate!
If you have to stay in your leased space after your lease expires and you have not been able to negotiate a renewal, is there a holdover rent rate? This rate can often times be 150% or 200% of your negotiated rental rate!