Real Estate Law

3 Things to Check Before Signing a Commercial Lease

When signing a commercial lease, it is essential to review the contract. Landlords can sometimes include clauses or technical terms which you may not understand. If you sign without a complete understanding, you may limit your company’s ability to succeed.

Read the Fine Print Before Signing a Lease Contract

Here are three critical things to look for in a commercial lease contract:

  • What type of lease is it? Not all leases are equal. If you do not understand what the agreement does and does not cover, you could end up with a larger bill than you realize. Check if the price includes taxes, insurance, maintenance, repairs and bills. Landlords may include none, some or all. If you are renting in a place like a shopping mall, they may also expect a sales percentage.
  • When can they raise the rent? Escalation clauses give the landlord the right to increase your rent. Most rental contracts include them, as costs do rise. Check how often and by how much they can raise the rent. You could agree to this as an amount or a percentage.
  • Are there restrictions on use? Commercial leases rarely allow free rein. Property owners often place limits on how you can use the premises. If you want to be the neighborhood’s first store to open 24/7, check the contract does not restrict your opening hours. If you want to sell chicken wings, check there is no clause limiting the sale of food. The small print may even determine things like what color you paint the walls.

Ensure you have an attorney review your commercial lease before signing it. You need to be sure of what you are signing.