This post originally appeared on tBL member Meybohm Commercial's blog and is republished with permission. Find out how to syndicate your content with theBrokerList.

Here’s a checklist to help you review your next lease.  Remember, this checklist doesn’t replace professional advice, but should help make sure you have a basic overview and can ask informed questions to your advisors.

  1. Lease Terms and Duration:
    • Identify the start and end dates of the lease agreement.
    • Identify the rent commencement, and if there are escalations when those would take effect.
    • Determine whether there are any renewal options or termination clauses.  If there are renewals, identify when notice needs to be given.
    • Note any rent escalation clauses or rent abatement provisions.
  2. Rent and Additional Charges:
    • Clearly understand the base rent amount and the frequency of payment.
    • Identify any additional charges such as common area maintenance (CAM) fees, property taxes, insurance, utilities, or other expenses.  If there is CAM, review the language regarding CAM and if there is a reconciliation.
    • Review how these additional charges are calculated and ensure they are reasonable.
  3. Security Deposit and Guarantees:
    • Determine the amount of the security deposit and the conditions for its return.
    • Assess whether any personal or corporate guarantees are required and understand the implications.
  4. Permitted Use and Exclusive Rights:
    • Review the permitted use clause to ensure it aligns with your intended business operations.
    • Check if there are any exclusive rights clauses that prevent competitors from leasing nearby spaces.
  5. Maintenance and Repairs:
    • Understand the responsibilities for maintenance and repairs, both structural and non-structural.
    • Determine who is responsible for common area maintenance and associated costs.
  6. Alterations and Improvements:
    • Evaluate any restrictions or requirements regarding alterations or improvements to the space.
    • Determine whether you need prior approval from the landlord and if there are any associated costs or obligations.
    • If the space is in shell condition, confirm what condition the space will be delivered in.
    • Thoroughly review the language regarding the Tenant Improvement Allowance, and confirm requirements for reimbursement.
  7. Insurance Requirements:
    • Review the insurance provisions and confirm the types and amounts of insurance coverage required.
    • Assess whether you need to provide proof of insurance and whether the landlord must be named as an additional insured.
  8. Assignment and Subletting:
    • Understand the conditions under which you can assign or sublet the space.
    • Check if the landlord’s consent is required and any associated fees or conditions.
  9. Default and Termination:
    • Identify the events that could constitute a default and the remedies available to the landlord and tenant.
    • Determine the notice period required for termination and any associated penalties or obligations.
  10. Renewal and Rent Escalation:
    • Understand the procedures and terms for lease renewal, including any changes to rent or lease terms.
    • Review any rent escalation provisions and ensure they are reasonable and clearly defined.
  11. Indemnification and Liability:
    • Review the indemnification clause and understand the scope of liability protection for both parties.
    • Assess any limitations on liability or potential risks associated with the premises.
  12. Compliance with Laws and Regulations:
    • Ensure the lease requires compliance with all applicable laws, regulations, and permits.
    • Identify any specific obligations related to ADA accessibility, environmental regulations, or safety requirements.
  13. Dispute Resolution:
    • Understand the dispute resolution mechanisms outlined in the lease, such as mediation, arbitration, or litigation.
    • Assess any limitations or requirements related to resolving disputes with the landlord.
  14. Review Attachments and Addenda:
    • Carefully review any attachments or addenda to the lease, such as site plans, drawings, or other relevant documents.
    • Confirm that these additional materials align with the lease terms and accurately represent the premises.
  15. Seek Professional Advice:
    • Consult with reputable commercial real estate broker and an attorney specializing in commercial leases to review the lease agreement and provide guidance on potential risks or areas of concern.

Remember, lease agreements can be complex legal documents, so it’s important to thoroughly review and understand all terms and conditions before signing. This checklist provides a starting point, but additional considerations may arise depending on your specific circumstances and the nature of the lease.

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