Protecting Both Business Finances And Futures

Understand the terms of commercial lease agreements

On Behalf of | Jan 29, 2020 | Real Estate Law |

When a business outgrows a home office, small business owners usually need to find a commercial building so they can expand their operations. If people have not signed a commercial lease before, they may not know what terms to look for on the contract. Each commercial lease agreement can be different, so it is important for people to understand the specific terms they are agreeing to.

Many people might think they are only responsible for paying the rent of their commercial space. According to Forbes, tenants sometimes have to pay other expenses. Each type of lease usually explains the necessary expenses. If people agree to a triple net lease, for example, then they typically have to pay all of the expenses. This usually includes insurance, property taxes and maintenance. Business owners who sign a double net lease generally do not pay for maintenance but do have to pay the property taxes, utilities and insurance. If a business owner agrees to a single net lease, then he or she is responsible for the property tax and utilities, while the landlord covers the other expenses. It is important for business owners to pay close attention to this part of the contract so they know whether they can afford a property.

When small business owners look over their commercial lease agreement, they should look at the security deposit. FindLaw says there is usually no maximum cost for a commercial security deposit. Additionally, it is a good idea to look at the rent clause. Some commercial agreements might include rent increases, and it is important for people to understand the reasons for these increases. Sometimes a business owner may make improvements to the property. In this situation, people should understand how these improvements will affect the rent price.

Sometimes commercial lease agreements may include use and exclusive clauses. This part of the contract explains how the tenant can use the building. Before people sign their contract, it is important for them to understand this section. Some use clauses may dictate the way a business owner advertises or they might allow only specific business transactions. Some of these terms may contradict the way people want to grow their business. Because of this, it is important for people to make sure the terms of the lease will let them use the property in a way that helps expand their business.



FindLaw Network