What are red flags in commercial lease agreements?

What are red flags in commercial lease agreements?

On Behalf of | Jan 7, 2022 | Commercial Real Estate |

After several months of planning, you feel ready to bring your business to life in the right building. Without knowing common commercial real estate agreement pitfalls, the wrong lease could turn your dream business into a nightmare.

LinkedIn explains several business real estate lease red flags. Learn how to become a business owner rather than a victim of a bad deal.

Missing holdover or disturbance clause

If your landlord cannot maintain financial control of the property you rent, the lenders may take possession of your space, leaving you without a place of business. Without a disturbance clause in your lease, you may not have sufficient time to find a new space if a financially struggling property owner’s actions nullify your agreement. With a holdover clause in your lease, you have time to negotiate a favorable deal before moving business sites or renewing your lease.

Indications of financial struggles

While touring potential business sites, pay close attention to how many vacancies the landlord has, how the space looks and what other commercial tenants say about the space and landlord. If you feel the landlord does not have the financial resources to stay in business and help you stay in business, consider looking for a space from someone more economically secure.

Overly positive projections

Of course, you want your business to be a success, but if business survivability predictions seem too good to be real, take the insights with a grain of salt. Before signing the lease, compare current economic disruptions for Mississippi businesses with the presented projections.

Take your time to find the ideal location for your business entity. Knowing what red flags to look for before signing an agreement could save you in more ways than one.