Queen O’Reilly, Negosentro | Defined by Business Dictionary as an “agreement between a landlord and a business outlining terms and conditions of property rental”, a commercial lease is one of the many defining responsibilities that you have to take into consideration for your business in its early stages. It “is specific to renters using the property for business or other commercial purposes versus residential use.”
Renting commercial space is a big decision for your business that you shouldn’t take lightly, as the success or failure of your business can sometimes come down to the more unusual factors for consideration such as this one.
A commercial lease can be an extremely onerous contract and expert legal advice is essential from the negotiation stage through the point of signing the original lease and related documents. This is due to the fact that a commercial lease is different from a residential lease – there are fewer consumer protection laws, no standard forms, is long-term and binding, and is negotiable and flexible.
According to Forbes, a commercial lease comes in many forms, such as:
- Single Net Lease (or simply Net Lease) – tenant only pays utilities and property tax; landlord pays maintenance, repairs, and insurance
- Net-Net (or Double Net) Lease – tenant is responsible for only utilities, property taxes, and insurance premiums for the building; landlord pays maintenance and repairs
- Triple Net Lease – tenant is responsible for all costs of the building, except the landlord is generally responsible for structural repairs.
- Full Service Gross, or Modified Gross Lease (also called modified net lease) – split structural repairs and operating expenses (property taxes, property insurance, common area maintenance, and utilities) between the tenant and landlord called ‘base rent’.
As a prospective tenant, it is vital that you must know what you are signing up for before you fully commit to the terms of the commercial lease. This makes sure that you are getting exactly what you are aiming for and that there is no miscommunication between you and the landlord on the intricacies and conditions of your lease.
Here are the questions that you should be asking, according to this infographic by Amorys Solicitors: