Top Mistakes to Avoid When Signing a Commercial Lease

New business owners are always looking for the perfect location for their company. But Business owners beware — commercial leases can be more costly than you think! Here is a list of top mistakes to avoid when entering into a Commercial Lease.

  1. Signing the Lease without Understanding it! I know the lease includes a lot of language in the smallest font that can be condensed onto one piece of paper! But you must not only read it, you must also understand it!  There are many hidden costs in leases in addition to “rent” and many conditions you are obligating yourself and your company to without even knowing it.  Know your termination rights; what are your options to extend your lease and annual increases assessed by your Landlord which increases your costs. Be Careful.
  2. Compliance with California and Local Laws:  Depending on where you plan to lease your new space, you need to make sure you understand the local ordinances, such as zoning or parking and that your business complies with these laws or you just may find yourself in a space in which you cannot operate your business; or find yourself in default of your lease.

ADA compliance is another big issue and can be a costly one.  Make sure you understand whether the space meets ADA standards.  If any tenant improvements are going to be made, your space will need to be code compliant, which includes ADA accessibility.  This can be very costly.  Know who is responsible.

  1. Repairs and Maintenance: Who is responsible?  Understanding what the Landlord is responsible for as far as repairs and maintenance goes throughout the life of your lease is crucial to a successful tenancy.  The costs triggered by one-sided repairs and maintenance provisions, such as ADA compliance issues as discussed above, can be expensive and jeopardize your business’ future.
  2. Property Tax: Did you know that if your landlord sells the building you are leasing that your share of the property taxes will increase?  Understanding costly surprises such as this will help in big picture planning.
  3. Negotiate: Negotiating terms and conditions of a lease can provide significant protections to your business over the life of your lease.  Having a lawyer well versed in the legal implications that arise from a commercial lease can make a huge difference in the cost of a lease, use and other conditions, and warranties over the course of the lease term.

Don’t sign that lease yet…have your commercial lease reviewed by a real estate attorney at Chauvel & Glatt to protect you and your business. Let us help you!

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