Commercial leases are necessary for businesses of all sizes that wish to have a physical presence for office space or a store front. Some startups and small businesses choose to have no physical space; however, as your business grows you may need commercial space. You will want to educate yourself on the lease process and what to consider when entering into one even if you plan to retain an attorney, which I highly recommend.
When you may have found commercial space, there are some things you want to consider prior to signing a lease. Below is a non-comprehensive list:
1) What exactly are your goals?
You want to have a clear idea of what you wish to accomplish with the commercial space. Things you might want to consider are: 1) how big of a space do you need, 2) how long do you plan to stay, 3) is there a chance you might need a new space in the not-so-distant future, 4) what are some of the special accommodations you might need and other general needs the business will have. Entering into a lease without deliberating on what you want to accomplish may create challenges down the road. An attorney can often sit down with you during the intake process and flesh out these objectives.
2) What are your financial responsibilities?
Commercial leases do not provide the same protections as residential leases. For instance, in New York City and throughout the state of New York, residential landlords must adhere to the warranty of habitability, which gives you the right to a safe, decent and sanitary apartment. Further, residential landlords must provide heat and hot water to their tenants and have other obligations requiring upkeep. Those same landlord requirements do not exist for commercial tenant. Instead of rushing to sign a lease, you might consider negotiating with the landlord on utilities and other expenses. An attorney and other real estate professionals can assist you with this process.
3) Should you or your attorney perform any type of due diligence?
A commercial tenant must ensure that there are no issues that will prevent her from using the premises for its intended purpose. A building’s zoning must permit you to use the premise for its intended purpose. Further, you’ll want to engage a title company to determine any liens, mortgages, etc. If a landlord is not paying his bills, but you are paying your rent, you could be in a difficult spot. It’s best to work with an attorney and other real estate professionals to ensure there are no issues with the property you plan to lease.
4) How do you make sure you protect yourself concerning key business issues?
As a business owner, you want to make sure you flesh out key issues prior to agreeing to anything. Can you sublet? If you need to expand your business, does the landlord have reasonable accommodations to allow such an expansion. These and other issues need to be fleshed out before signing a lease.
Leasing commercial property can be an exciting time for your business. It’s best to take your time and be diligent when entering into a commercial lease. A little time and energy prior to entering into a lease can save you a lot of time and aggravation late.