If you are a business person, you will find yourself negotiating commercial leases when leasing commercial and industrial properties. The rule when negotiating these contracts is to ensure the conditions protect the welfare of your business. Below are several insights to help you negotiate a commercial lease.
Shared Property
Most commercial properties contain shared amenities such as staircases, lifts, parking lots, and parks. Your immediate concern would be how to use and manage the shared property. In most lease arrangements, you will be required to pay annual maintenance fees to keep the property in excellent condition. Inquire how the property maintenance charges are calculated. Typically, the property owner or manager should use floor space to determine how much you should pay. Inquire about the use of the shared property. For instance, how many parking lots are you allocated? Do you have access to CCTV footage in the shared areas? Can you hold an end-of-year party at the rooftop or park? The rule is to ensure the conditions are friendly and flexible.
Property Use
How can you use the leased space? Some concerns would include;
- Are there restrictions on the kind of business you can open? For instance, some owners could prohibit you from opening a bar if the property's anchor tenant is a hospital.
- Can you fit out the rented space? Most owners will consent to fit-outs. However, they could prohibit you from interfering with structural features such as pillars.
- Is the building insured? It helps you determine the type of insurance you need to run the business.
- Is the building accessible 24/7? It is a concern if you intend to keep your business open at night.
- Are there any restrictions inside the building? For instance, the owner could prohibit clients from accessing certain areas. Moreover, the building could have noise restrictions.
Competing Businesses
For long-term leases, the commercial lease should protect your business from its competition. For example, if you intend to open a restaurant, the contract should prevent the owner from bringing in clients with similar businesses. This way, you have an easy time marketing your business and ensuring it remains profitable.
Termination Conditions
Assess the conditions under which the parties can terminate the lease contract. For example, the landlord could evict you if you do not honour the payment arrangements or flout the lease conditions. Ideally, the eviction process should include a dispute resolution mechanism. This way, parties have an opportunity to iron out their differences. If they cannot find a solution, they can terminate the agreement.
Contact a lawyer if you have questions about a commercial lease.
