As a business owner, committing to a lease is a significant decision that can have far-reaching consequences for your bottom line. The contract goes beyond making periodic payments; it’s a long-term commitment that defines your rights, obligations and responsibilities, which can influence your business’s success.
That’s why it’s essential to understand every aspect of the lease agreement before putting pen to paper. It can help avoid unexpected costs and complications down the road.
1. Understand the lease type
There are different types of leases, and understanding the type you’re signing is essential. For instance, you may be responsible for additional costs like taxes, insurance and maintenance with the net lease while the landlord covers most property expenses in a gross lease. Understanding such intricacies before committing to a lease agreement can help you plan accordingly and avoid costly surprises.
2. Rent is only part of the equation
Do not just look at the rent when signing a commercial lease. Other associated fees, such as common area maintenance costs, utilities or insurance, can quickly add up and lead to budget shortfalls. Get a breakdown of every charge you’ll be responsible for so you’re prepared.
3. Negotiate key terms
Look at the lease terms that could affect your business’s growth and negotiate where possible. Factors like rent escalation clauses, renewal terms and penalties for early termination can impact your financial stability. Securing favorable terms now can help you manage costs and adapt as your business grows.
It helps to get an informed evaluation of a lease agreement before signing it. Seeking legal guidance can help you navigate complex clauses, ensure you make the best choice for the future of your business and safeguard your interests.
