Negotiating commercial leases: Don’t give post-dated checks
Wednesday, June 06, 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 or she 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:
Don't give post-dated checks
One of the main jobs for a property manager is to collect the rent. Naturally, they will prefer to have post-dated checks.
You may, however, not have the rent money until the third day of the month. Paying a few days late is better than bouncing a check.
Perhaps there is a recurring problem with the air conditioner or the property’s garbage bin hasn’t been emptied this week. By not providing post-dated checks, you can retain some control.
It is often possible to modify this clause in the lease agreement or negotiate it out of the lease agreement entirely.
Catch up on rental arrears
It’s not uncommon for a commercial tenant to find themselves behind in the rent. In this case, your landlord will very likely accept a repayment program that is more manageable for you.
The key is to go to your landlord before your landlord comes to you. It’s even possible to have your rental arrears partially or totally forgiven as part of the lease renewal inducement package depending on the individual situation.
Ask, ask, and ask again. You may be forced to pay interest, but that may be acceptable. Negotiate for a payment plan to catch up.
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