What are risk items to watch out for in a commercial lease?

What are risk items to watch out for in a commercial lease?

On Behalf of | Jun 6, 2024 | Commercial Real Estate |

Lease management is crucial to prevent issues, such as unexpected terminations and overcharging for rent. These problems may lead to serious financial issues and interruptions in operations.

It is wise to keep track of the risk items in your commercial lease to avoid expensive fees and protect your credibility.

Commercial lease risk items

Payment terms are crucial elements of a commercial lease. When signing the document, note the details of your payment terms and rent obligations. Keeping track of this relevant information can be tricky since they appear in multiple places in a lease.

The key to understanding your payment terms is carefully evaluating the lease before you sign it. The lessor may require you to keep the place in good order, pay a share of operating costs or handle structural issues that may arise. Understanding these complex clauses is crucial to preventing evictions or overcharging.

Another risk item to note is the penalty for early termination. While some landlords do not require a fee, some fine tenants for terminating their lease early.

When signing a commercial lease, look for information regarding the terms of early terminations. This way, you will be prepared to pay for it if you find a better property soon after moving.

Your lease may also specify what you can and cannot do regarding maintenance and repair. For example, your lessor may prohibit you from restructuring the layout of a floor or ripping down walls. If you want to perform repair work for the property, consult with your landlord and ensure you only cover what you are responsible for.

Importance of proper lease management

Proper lease management is crucial to prevent costly disputes between you and your lessor. It also helps protect your credibility, avoid evictions and prevent unnecessary fees.