In this article we will discuss five elements that you should comprehend in your lease.
As a business owner, one of the most important contracts that you will sign is your lease. Operating a business can be very demanding and details can slip through the cracks. It is important for you to be aware of the essential points in your lease. This is especially important if your business location is a key part of your success. You might want to consider obtaining legal advice to help you understand the essential points.
Here are five elements that you should comprehend in your lease.
What’s Included in the Rent Payment
It is important for you to understand what the rental payment includes. Some leases include some or all of the utilities, insurance, property taxes, maintenance, and other costs in the rent payment. With others, the tenant is responsible to pay some or all of these costs. Make sure you understand exactly what your monthly rent includes.
The Term of Your Lease
A critical area of your lease is its term or duration. A landlord will sometimes offer a lower rent payment in exchange for a longer lease term. However, be sure the term of your lease is in keeping with the current state of your business and your future goals. For example, if you believe you might need a bigger space within the next year or two, it would not make sense to sign a five-year lease at your current location.
Exit and Exclusivity Clauses
When negotiating your lease, it is prudent to include an option for getting out of the lease.
It matters where your business is located. If you are signing a lease to locate your business in a strip mall or shopping center, you should try to have written into your lease agreement that you are the only business of your type that will be located in the mall. The last thing you want is to see a similar business opening up nearby.
Transferring Your Lease
It is important to be able to transfer your lease. Having this flexibility allows you to more easily adapt to unexpected changes in the future. It is in your interest to have a clear understanding of how, and under what circumstances, you can transfer your lease to a new owner. While the landlord cannot restrict the sale of your business, you could get left holding a personal guarantee in order for the lease to remain in place for the remainder of the existing lease term. Then the new owner would be left to negotiate the lease renewal on his or her own.
Assignment of Responsibilities
It is important to understand what you are responsible for and what the landlord is responsible for handling. If you as the business owner are to assume responsibilities related to the property, then those responsibilities should also be clearly outlined in the lease.
There are many variables involved in owning and operating any business. The physical location of your business should be among your top concerns. It is very important that you comprehend your lease. When signing a new lease, try to negotiate a lease that will be as helpful to you as possible.