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Precautions to take before signing a commercial lease

Before you sign a commercial lease, it is crucial to understand every minor detail and clause in the contract. 

After all, you are in a much stronger bargaining position to ask for alterations before you sign than after. Once you’ve put ink to paper, you may find it very hard to undo a mistake.

Make sure you understand how the rent is calculated

There are various ways for commercial landlords to price their leases, so you need to understand the type of lease you are signing. Some are all-inclusive, while some exclude a combination of maintenance, taxes and energy costs.  Others may require you to pay an additional percentage of your profits on top of the basic lease cost.

You also need to be clear about what the lease will cost you in the future. Unless you plan to move premises within a year, you need to clarify how long you have tied down the current rate. Landlords will want to increase the rent at some point, so it is crucial to understand when the contract allows them to do that and by how much.

Make sure you understand the lease restrictions

However ideal a property and its location may seem, it is useless if you cannot use it in the way your business needs. A lease can restrict certain activities, for example, preventing you from cooking food. Or it could restrict alterations, making your idea of widening the doors to allow access to a garden seating area a non-starter. The landlord might also stipulate that you cannot sublet, so if things do not go as well as hoped, you cannot find another business to help pay the rent.

A commercial lease agreement is a legally binding document, so it is wise to get help to ensure you fully understand it first. It is easier to do this than undergo a legal battle to get out of an unfavorable lease agreement in the future.