Signing a commercial lease? Watch for problematic clauses

Leasing commercial space to operate your business is an important process for any business owner. You want to be confident that the space fits your needs as well as your budget, and it may take you some time to find the right property.

Once you do find the space you are looking for, however, you should not rush through the steps to secure it. It is important that you review the lease closely and look out for any clauses or conditions that could ultimately hurt your business.

Clauses that limit use of the space

As discussed in this article on commercial lease terms, use and exclusive clauses can set strict limits on what you can and can't do with the property. They might specify the type of signage you can use and the type of business you are permitted to conduct. I have seen client's leases that actually prohibit the type of business activity that the client is wanting to conduct in the commercial space.

You might also see clauses that prohibit subletting or allow a landlord to take over the property if you cease operations, even if you still plan to pay rent.

Rent increase clauses

Your lease could have a stipulation for automatic rent increases that catch you off guard. In some cases, the increases can seem unfair and extensive to a prospective tenant, so it is wise to address them before signing the lease. You should also be sure that you agree with the rent payment terms, including when rent is due and how long you have to get insurance.

Clauses that impact your business operations

Are there restrictions on parking or access that conflict with your needs? Do the security clauses protect your employees and customers? Commercial leases typically contain clauses that address these issues and it is important that you review them closely to ensure you are not agreeing to something that compromises the day-to-day operation of your business.

Consult an attorney before you sign a lease

Because you may not have experience with commercial leases, and because there is a lot on the line, it is a good idea to review a lease with an attorney before you sign it. With the help of an attorney who is familiar with these and other legal documents business owners must have, you can address and negotiate any potentially problematic or costly clauses.

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