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3 questions you should ask before signing a commercial lease

On Behalf of | Nov 22, 2017 | Business Formation & Planning, Commercial Real Estate, Landlord And Tenant Law, Small Business Representation |

As an entrepreneur, it is important for you to ask some questions about commercial leases. If this is your first time trying to secure a commercial property, you may worry that a landlord may attempt to take advantage of you. Therefore, it is crucial for you to know what to look for in a leasing agreement and how to negotiate.

Asking the right questions and doing your research regarding a lease can go a long way in pointing you towards the right decisions for your finances and business venture. Here are some essential questions you may want to ask before you sign a commercial lease.

1. What type of lease is being offered?

According to Forbes, there are numerous types of commercial leases, and they are usually far different than a standard apartment lease that you may be familiar with. They include:

  • Single net lease – You are responsible for utilities and property taxes, and the landlord covers repairs, maintenance and insurance.
  • Double net lease – You are responsible for utilities, insurance premiums and property taxes, and the landlord pays for repairs and maintenance.
  • Triple net lease – You are responsible for all property expenses except for structural repairs.
  • Full-service gross lease – You and the landlord split operating expenses and structural repairs.

It is imperative to figure out the type of lease because it will directly affect how much you will pay in rent.

2. Is the lease negotiable?

Almost every commercial lease is negotiable to some extent. Find out if the landlord is flexible on any terms such as the duration of the lease, security deposits, rent caps or lower fees. If your landlord refuses to budge on anything, it might be a sign he or she could continue to be difficult to work with.

3. What insurance will you need?

If you are new to leasing a commercial space, you may not initially think beyond utility costs or monthly rent. However, you must factor in insurance coverage to any lease you are considering. Your landlord will likely require you to buy some insurance. Find out how much insurance you need to buy and figure out if it is too expensive.