Do you know these red flags when signing a commercial lease?

| Sep 10, 2021 | Real Estate |

After a lot of deliberation and consideration, you feel ready to move your business into a physical location. Do you know how to protect yourself from becoming a victim of a poor business agreement?

Forbes breaks down several warning signs when signing a commercial lease. Know when it could benefit you to cut your losses and look elsewhere for a home for your business.

Giving back the space

Looking over the lease, do you have the option to return the space within the initial five years? The agreement should also let you make the initial offer for an adjacent space if it opens.

Suspiciously positive business protections

You want your business to thrive, but you do not want a false sense of security. Beware of property owners and landlords who seem too optimistic, as that optimism could cost you your business.

Muddy responsibilities

Commercial and residential leases should clarify all shared and individual tenant and landlord responsibilities. For instance, who bears responsibility for adhering to California’s latest safety and health regulations?

One-sided force majeure clauses

Take your time when reading over a commercial lease’s force majeure clause. This clause absolves a party of performance responsibilities when specific, uncontrollable situations arise. Whatever the clause, ensure it does not favor your landlord over you.

Unfavorable provisions

All commercial lease provisions should benefit tenant and landlord equally. Spotting one non-mutual or one-sided provision could mean the lease contains others. A commercial real estate professional could help you determine whether the lease’s provisions could put you at a legal disadvantage.

Take your time when reviewing and deciding on a commercial lease. Patience and the right insights could boost your chances of finding an ideal agreement and storefront.

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