Renting commercial space is a huge decision, your business’ success or failure is tied on certain terms of the lease. As a business or organization, you need to be acquainted with basic terms of the lease before you approach a landlord.
Before signing a lease agreement, carefully interrogate its terms to make sure the lease meets your business’s needs. First and foremost, consider the amount of rent if it’s affordable by your standards. Also, opt for a short-term lease with renewal options; this is usually safer for new investments. The lease should also allow for modifications if your business might require it e.g. rewiring or adding cubicles.
You must also understand that legally and practically commercial leases differ from residential leases in the following ways:
Long-term and Binding
A commercial lease is a legally binding long-term lease and cannot be easily changed or broken. Usually, a good chunk of money is at stake.
Negotiability and Flexibility
Commercial leases usually involve much more negotiation between the business owners and the landlord. This is because businesses, unlike residential spaces, need special features in their spaces.
Fewer Consumer Protection Laws
Unlike residential leases, commercial leases are not subject to most consumer protection laws; e.g. there are no rules protecting a tenant’s privacy.
No Standard Forms
Many commercial leases are not standardized; each is customized to the landlord’s needs. This implies that you should carefully examine every commercial lease agreement offered to you.
Mandatory and Proposed Terms for Commercial Lease Agreements
A lease agreement for a term that is more than one year is not valid unless it is in writing and signed in the presence of two subscribing witnesses. This is because a CRE lease is an interest in real estate. The witness, however, does not have to be a disinherited party to be a qualified subscribing witness. If the lessor or tenant is a corporation, the entity may seal the lease agreement using a “corporate seal