3 things to include in your commercial lease

By Greg Bell

Whenever entering into a legal agreement that requires the signing of contracts, you should be careful to make sure that every aspect of that agreement is going to fit your needs. That's particularly true when it comes to a commercial lease, because such a document clearly delineates who is responsible for what and all the financial arrangements that are being agreed to.

Over the course of a lease agreement, a lot of money will change hands and various issues will have to be worked out on an ongoing basis. What should be included in this type of document to ensure both sides are on the same page?

Who pays for what

There are many costs associated with keeping a commercial property in good shape, and owner and tenant will have to come to an agreement on who is responsible for those expenses, according to real estate expert Clint Gharib, writing for Forbes. Obviously the tenant will cover their monthly rent costs, but what about things like utilities? Property tax? Insurance premiums? The cost of upkeep or repairs as needed? You will likely have to meet in the middle to find a suitable arrangement, but depending upon the state of the market, either the owner or new tenant may have to give a little more than they'd like.

Will there be a security deposit or bank guarantee?

In many cases, a building owner may ask a new tenant to provide some sort of sizable payment to help protect them in the event the agreement does not work out, or if the building is badly damaged (such as through negligence). SmartCompany explained that this may be another point of negotiation — how big is the deposit requirement? is it really necessary? — but it's something a tenant will definitely have to prepare for, financially speaking. However, the size of the deposit or guarantee, and even whether it's needed at all, could be negotiable.

Can the space be subleased or assigned?

In some cases, a lease agreement not necessarily meet the needs of a changing business, and the lessee might want to sublease part of the property to another business under the same terms as the larger agreement. Whether that will be allowed is a big question for the building's owner, according to The Balance Small Business. Most won't allow subleasing, but it may be something that can be negotiated as well in certain situations.

Along similar lines, business owners may want to build the option to make the lease assignable into the agreement. Under assignment, which means basically vacating a property entirely and giving it over to another business to take up the lease with the same deal in place. This is another highly unlikely scenario: Most landlords will allow a business to terminate a lease agreement if the need arises, but would prefer to renegotiate with a new tenant rather than carry over an existing agreement. However, assignment might be something the property owner will consider in certain situations.

When you are looking to buy or sell a commercial property — whether as the owner and occupant, or to rent out to other businesses — it's critical that you have a reliable, seasoned real estate professional by your side. With the benefit of years of experience in the business, they can guide you through the ups and downs that come during the sales process, from either side of the transaction. At Ray White Surfers Paradise, we're here to help you find success, so get in touch with us today to start your journey off on the right foot.

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