Negotiating commercial leases: Anticipate your lease agreement
Wednesday, May 23, 2018
For many commercial tenants, negotiating a good lease or lease renewal against an experienced agent or landlord can be a challenge. While an entrepreneur focuses on marketing and managing his own business, savvy real estate agents and brokers are specialized sales people. Their job is to sell tenants on leasing their location at the highest possible rental rate.
Tenants may go through the leasing process only two or three times in their entire lifetime — yet they have to negotiate against seasoned professionals who negotiate leases every day for a living. Negotiating appropriate leasing terms is vital for a commercial tenant as the amount of rent he pays will directly affect the entrepreneur’s financial bottom line.
Whether you are leasing a new for the first time or negotiating a lease renewal for your business, here are some tips:
Anticipate your lease assignment
Landlords anticipate that you will eventually sell your business and that you will want to assign your lease agreement … you should, too!
Some lease agreements state that the landlord can unilaterally terminate your lease rather than grant an assignment.
On the other hand, a landlord can also automatically raise the rent for the new tenant (your business buyer). Check this clause very carefully before you knowingly agree to it … and then negotiate for changes.
Check out the HVAC system
If you occupy strip mall space or a building where your premises has a designated heating, ventilation, and air-conditioning (HVAC) unit then your lease probably says that you are responsible for repairs to and replacement of that HVAC unit.
While most property managers have preventative maintenance inspections done, you can stipulate that the HVAC unit receives an inspection and undergoes repairs (both by unbiased outsiders) before accepting responsibility for it.
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