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Check to make sure these clauses are in your commercial lease

On Behalf of | Jul 1, 2024 | Real Estate Law |

Signing a commercial lease is a big step for any business. It is important to understand what is in the lease and make sure it protects your interests.

With that in mind, there are some essential clauses that should be in your commercial lease before you sign.

Rent and increases

The lease should clearly state the amount of rent and when it is due. It should also outline how and when rent increases will happen. Some leases include a set schedule for rent increases, while others might tie increases to inflation or market rates. Knowing this information helps in planning your long-term business finances.

Lease term and renewal options

Make sure the lease specifies the length of the lease term. This could be a few months or several years. The lease should also include any options to renew. Renewal options can provide stability and help you plan for the future.

Maintenance and repairs

It is important to understand who is responsible for maintenance and repairs. The lease should state whether the landlord or tenant handles these tasks. Some leases might split responsibilities, with the landlord handling structural repairs and the tenant taking care of minor repairs and maintenance.

Permitted use and exclusivity

The lease should define what type of business activities are permissible on the property. Additionally, an exclusivity clause can be very beneficial. This clause prevents the landlord from renting space to a competitor within the same building or complex.

Alterations and improvements

The lease should outline any rules about making changes to the property. This includes renovations, improvements and alterations. It should state whether you need the landlord’s approval for any changes and who will pay for them.

Subleasing and assignment

The lease should address whether you can sublease the space or assign the lease to another business. This can be helpful if your business grows and you need to move to a larger space before the lease ends.

Termination and default

It is important to understand the conditions under which either party can terminate the lease. The lease should detail what happens if either party defaults on the agreement. This includes any penalties or fees for breaking the lease early.

By ensuring these clauses are included in your commercial real estate lease, you can protect your business and avoid potential problems. Always read the lease carefully and make sure it meets your needs before signing.