Factors to Consider When You Are Entering into a Commercial Lease

 Posted on March 22, 2023 in Real Estate

When you are starting your own business, there are a number of issues that you need to make decisions on. One of the most critical of those decisions is where your business will be located. Many businesses prefer to lease property instead of purchasing a property. This usually involves entering into a commercial lease with the property owner. There are certain factors that should be addressed in the lease. Having a qualified business real estate attorney representing you will ensure you are protected.

Entering Into a Commercial Lease

A commercial lease is one that is entered into between a property owner and a business owner. The difference between a commercial and residential lease is exactly as it sounds – a commercial lease is for a property that is zoned by the municipality it is located in to be used for commercial uses, while a residential lease is for residential property.

As mentioned above, the majority of business owners choose to lease over purchasing the property their company will be located at. Leasing is often less expensive than owning because the property owner is the party who is responsible for the upkeep, maintenance, and repairs. There is also the benefit of tax deductions since all of the rent you pay is deductible, whereas only the interest on a mortgage is deductible.

One of the most important issues that must be agreed upon (besides the amount of rent) is the length of the lease. This is especially important for a new business because there is no history as to how the business will be received and/or if the location is the best choice. This is why it is often advisable for a new business to enter into a shorter lease term than the landlord may be looking for.

It is also important to avoid signing a lease that has an acceleration clause. An acceleration clause allows the landlord to request all of the unpaid rental amount for the remainder of the lease term should the business not be as successful as planned and close its doors before the lease is up. Instead, the business owner should try to negotiate an escape clause that would free the owner from the lease should the business fail.

Once a business is established and successful in the location, that is when the owner can look to have longer lease terms.

What Other Issues Should Be Addressed?

Some of the other issues you will want to make sure are addressed in the lease are:

• What, if any, parking areas can be used by employees and customers of the business?

• If there are common areas in the building (i.e., restrooms), can these areas be used by employees and customers?

• Will the business be able to place signs on the building, in the space, etc?

Failure to address issues like this specifically in the lease can end up causing problems, later on, should there be disagreements over what the landlord will or will not allow and how that impacts the business owner’s plans.

Call a Broward County Business Real Estate Lawyer for Help

If you are a business owner who is looking at commercial properties, make sure you have a Fort Lauderdale, FL business real estate attorney looking out for your best interest. Call The Elliot Legal Group, P.A. at 754-332-2101 to find out how we can help.

Source:

https://www.linkedin.com/pulse/why-do-companies-prefer-leasing-buy-commercial-space-business-amit?trk=public_profile_article_view