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Lease contracts can be complicated but every small business owners needs at least one. No matter if you are renting a commercial space or office space, you need to understand your small business lease.

Don’t let the tiny print or complicated terms confuse you – read on to learn how to read your business lease.

Common Problems To Look Out For

– One of the most important things when signing a lease is that this is a contract that you most probably can’t end early. If you agree on a two-year lease you agree to pay the rent for that period of time no matter how your business goes. The owner of the premises does not need to reduce your rent or let you out of the lease just because your business is not going well. You need to be prepared for that and discuss it with the owner in advance.

– Another issue arising from leasing contracts is that the small business owner does not understand the roles and responsibilities of the parties. A common problem occurs with the CAM costs (Common Area Maintenance) – who is responsible for them and why? If you don’t make this clear in the beginning you might turn up paying too much for something you are not supposed to.

– In addition, you must be unambiguous who carries the liabilities of damage and common area requirements. Who will be responsible for renovations and reconstruction?

– One unpleasant thing that small business owners need to be on the look for is the way the lease’s rent will increase during the time of the lease. You need to be aware of the rent rate change and negotiate it before signing the lease.

– The most important thing to remember is to get help before problems start – a lawyer’s review of your lease might cost you, but surely less than a dispute in court. Don’t rely on handshakes and smiles – have everything in writing.

Why You Need To Understand The Lease?

We all know that there isn’t any small business that can afford to lose money or spend it where it is not urgently required. If you don’t understand the lease agreement, you might turn out in tens of thousands of dollars in debt and a lawsuit on your plate. That’s why it is extremely important to 1. Read the lease carefully, 2. Make sure you ask the right questions, and 3. Consult a lawyer to put your consciousness at rest.

What To Do If The Owners Wishes To Break The Lease

Don’t be fooled that the power in this relationship belongs to the owner of the property. He or she is bound by the lease contract as strongly as you are and needs to adhere to the agreements you have made. There are extreme situations in which owners can break the lease but this is not commonly possible without a legal reason. If the owner wants to break the lease without any breach on your part, it is better to contact a lawyer as early as possible to avoid financial and business damage to your company

Remodeling? Think Twice!

If you haven’t discussed the renovating or remodeling issues with the owner it might be quite hard to do that after the lease is signed. You need to agree on the conditions of renovating – who can do it and under what circumstances, and most importantly who pays for what.

How to Get The Best Lease Terms

The first thing we would advise you to do is contact a legal professional who has experience in contract law and knows how to negotiate a better lease for you.

If you still decide to go and sign the lease on your own, what we would recommend is doing a bit of research before:

–       Who rented the place before?

–       Did their business succeed or fail?

–       What kind of customers flow via the location?

–       What are the risks of the location?

–       What improvements or changes need to be made?

–       What if the business fails?

Do your due diligence and point out risky and unclear matters to the owner to use in your advantage when negotiating the lease.

A small business lease is not a contract to be ignored or underestimated. It is a legal binding agreement that can cost the small business owner hundreds of thousands of dollars when not put under a microscope. This is the reason why your experienced lawyer is your best resource when signing a lease.