What You Need To Know About Leasing Commerical Property
Leasing commercial property can be very confusing. Many people get into commercial leasing contracts and end up having problems because they didn't fully understand everything that the contract entailed. This is why it is important that before you enter into any kind of contract that you make sure you are protected. Here are a couple things you should know.
1. Pay Close Attention To The Length Of The Lease
Unlike a residential contract, which is generally a year-long lease, a commercial contract can be any amount of time. In some cases you might be asked to sign a contract that binds you for several years. If you default on the lease, you will be completely responsible to pay the amount in the lease agreement. It is not like you can walk away and just lose a deposit. The leaser could sue you for all of the amount that you agreed to pay over the years.
2. Know If You Are Getting Fixed Rent
When you sign a lease agreement you are not agreeing to just one price. Instead, many commercial lease agreements will be on a sliding scale. For instance, the first year you might pay one amount then the next year it will raise a certain percentage, the following year it will raise more and so forth. Do not think that when you sign that contract that you have been bound to only one price, this could get you into trouble in the future.
3. Ask About Improvements and Changes
Another important thing to discuss is what will happen to improvements that you make to the property. For instance, if you install new lighting, add features, paint and do anything else to improve the property you might not be compensated for those changes. In addition, when you leave you might have to leave these improvements, like lighting and such.
4. Restriction To Business Practices
Assume that when you first rent the property you are just a warehouse, but down the road you want to open a shopping center. Before you sign that contract you need to be sure that you can provide the services that you want. It could be incredibly frustrating if down the road you want to expand your services, but your contract prohibits it. Especially since a commercial lease contract is incredibly hard to get out of.
By understanding these things you can protect yourself when you rent commercial property. If you need help preparing yourself, contact a company like Brandt Law Group to learn more.