Many small businesses opt to operate out of a leased property when they’re first opening. Many people think that finding the perfect place is the biggest challenge a business owner will face in relation to their location.
One of the difficult things to navigate in these situations is the lease agreement. This is a legal and binding contract that covers the tenant’s and landlord’s responsibilities and rights. Consider these basic components:
Lease term and rent
The lease term is the duration of the lease agreement. The rent amount and payment schedule should be clearly stated in the lease. Ensure you understand the base rent, any additional rent such as common area maintenance fees and any rent increases over the lease term.
Permitted use and modifications
The lease should clearly define the permitted use of the premises, which outlines the types of business activities you’re allowed to conduct. Make sure the permitted use aligns with your intended business operations.
The lease should specify whether you’re allowed to make improvements or modifications to the space and the process for obtaining approval from the landlord. It should also clarify who is responsible for the costs of these modifications.
The lease should outline the responsibilities of both the landlord and the tenant regarding specific repairs, regular maintenance and any costs associated with these tasks. It should detail which utilities are included in the rent, and which ones are the tenant’s responsibility.
Termination and renewal
The lease should explain the process for terminating or renewing the lease. Any added costs or notification requirements should be noted.
These are just a few of the important components of a commercial lease. It’s crucial to thoroughly review the lease agreement, ask questions and negotiate terms that work for your business.