Common Mistakes Made by Tenants in Commercial Lease Agreements

Common mistakes made by tenants

As a business owner, signing a commercial lease agreement for your business is a major step. A lease agreement outlines the terms and conditions of your arrangement to lease commercial space with the landlord. It is intended to ensure that both you and the landlord are on the same page. However, it’s not uncommon for tenants to make mistakes when signing a commercial lease agreement. In this blog post, we’ll discuss some of the most common mistakes made by tenants in commercial lease agreements and how to avoid them.

 Not Reading the Lease Agreement Carefully: Before signing a lease agreement, it’s important to read the document in its entirety and understand all of the provisions. Failure to do so can result in misunderstandings and disputes down the line.

 Neglecting to Negotiate: A commercial lease agreement is a legally binding document, and it’s important to make sure that it meets your needs and expectations. Don’t be afraid to negotiate with the landlord on terms such as rent, security deposit, renewal options, and maintenance obligations.

Underestimating the Cost of Rent Increases: Many commercial lease agreements include provisions for rent increases over time. It’s important to understand how much the rent may increase and to budget accordingly. Many tenants are surprised at how quickly the increases in rent add up.

Not Understanding the Responsibility for Repairs: The lease agreement should outline who is responsible for making repairs to the leased premises. It’s important to understand this provision and to ensure that it aligns with your expectations.

Ignoring the Termination Clause: The lease agreement should also include a termination clause that outlines the circumstances under which the lease may be terminated. It’s important to understand this provision and to ensure that it meets your needs and expectations.  The language of this provision will depend on the bargaining leverage of each party.

Neglecting to Get Insurance: Most commercial lease agreements require tenants to have insurance coverage for their business. It’s important to understand this requirement and to make sure that you have adequate insurance coverage.

Not Understanding the Subleasing Clause: Some commercial lease agreements include a subleasing clause that allows tenants to sublease part or all of the property. It’s important to understand this provision and to ensure that it aligns with your needs and expectations.

Not Seeking Legal Advice: A commercial lease agreement is a complex legal document, and it’s important to seek the advice of a qualified commercial real estate lease attorney. An attorney can review the lease agreement, advise you on any potential legal implications, and negotiate on your behalf.

In conclusion, signing a commercial lease agreement is a major step for any business owner. By avoiding these common mistakes, you can ensure that your lease agreement meets your needs and protects your interests. If you have any questions or concerns, don’t hesitate to seek the advice of a commercial real estate lease attorney.

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