When people sign a commercial lease, it is important that they understand all of the terms they are agreeing to.
There are a few portions of the lease people should examine closely.
Type of lease
Forbes says that each kind of commercial lease has its own terms. Tenants may be responsible for additional costs depending on the kind of lease they sign. If people have a modified gross lease, they may share taxes, maintenance expenses and insurance fees with the landlord. When people sign a single net lease, they are responsible for the property tax and utilities, while the landlord covers the other expenses. For a triple net lease, a tenant has to pay all the expenses for a commercial space. A tenant with a double net lease may pay for the insurance premiums, utilities and taxes but not maintenance. These additional expenses may determine whether a business owner can afford to lease the space.
Sometimes business owners may stay past the end of their lease if they are looking for a new space. According to Business News Daily, landlords may charge holdover rent in this situation. Holdover rent is usually more than the monthly rent payment. Tenants should make sure the commercial lease specifies the amount they will need to pay in holdover rent. If the cost of holdover rent seems exorbitant, tenants may ask to negotiate this portion of the contract.
Business owners may need to transfer their lease if they decide to relocate their business. A commercial lease should lay out the process for transferring the lease to a new tenant. Some landlords may allow tenants to sublet the space, while others may assign the lease to a new tenant. Before signing the lease, business owners should make sure they know which method their landlord uses.
Commercial leases can be complex documents but with careful examination, business owners can make sure they understand the terms.