With A Lease, The Devil Is In The Details

but not when Walking Roller you suddenli find yourself without such amen at the wrong timeA small detail to consid now..

you should not onli consid the old standard "location,

In the last articl we look at a few of the thing you should consid befor leas that first offic or storefront for your business. To recap. location, location," but also consid thing like suffici parking, the number of employe who will be work onsite, and futur growth projections. I stress that it wa import not to get caught up in the moment. You should take your time to find the space best suit for your busi for the long haul, not just for today.

Thi week we'll discuss the most import aspect of the process: sign a commerci leas insert dramat music here . One of the biggest mistak mani entrepreneur make when leas commerci space is not read the lease. Forget read the fine print. When it come to a leas it ALL fine print.

Homer,Don't believ me? Let me tell you the true stori of my friend. whose name I have chang to protect the ignorant. Homer sign a two year leas on a suit of offic for hi business. As the owner of the busi Homer sign on the dot line and agre to person guarante payment of the leas and to abid by it terms. Homer move in and it wa busi as usual until the end of the two year leas term drew near. It wa then that Homer discov that fail to read the leas wa go to be a veri costli mistake.

but when he gave the landlord what he thought wa the customari 30 dai notice,Toward the end of the two year leas period Homer decid to relocate. he discov that the leas had automat renew for anoth two year term at the 60 dai notic point. In other words, Homer didn't realiz that the leas requir a minimum of 60 dai notic to let the landlord know that the leas would not be renewed. Becaus Homer did not know that he wa requir to give at least 60 dai notic of hi intent to vacate, the leas automat renew for anoth two years. And there wa not a darn thing Homer could do about it but reach around and slap himself in the back of the head for not take the time to read the lease.

while sympathet to Homer' plight,What wa the landlord' posit when Homer point out that he had not read the leas and therefor wa not awar of the 60 dai notice? The landlord. stuck to hi gun and told Homer that he would have to honor the lease, which meant that even if Homer move out as planned, he wa still on the hook for pai the rent for anoth two years.

he had no choic but to enforc the term on the lease. He had a sign contract that told him hi space wa go to be rent for the next two years. He had not plan on the space suddenli be vacant. Be a landlord with unrent space is like be a busi with no pai customers. Empty space mean no revenu from rental fee which mean no monei to pai the mortgag payment. As the old sai goes,Do the fact that the landlord chose to enforc the leas agreement rather than let Homer off the hook make him an evil man? Not at all. From the landlord' point of view. "It' just business..."

ani landlord with a heart might feel bad that Homer wa ignor of the auto-renew clause,Sure. but not so bad that thei ar will to risk their own financi well-b by have Homer' space sit vacant. The bottom line is this: whether Homer read the leas or not is irrelevant. Homer sign the lease, therebi agre to it terms, and therefor he must hold up hi end of the bargain, period.

Homer is reloc hi busi in spite of not be abl to get out of hi old leas and he will continu pai the payment on the vacat space for the remain two year term of the leas or until he can subleas the space. Even then Homer is not fulli off the hook becaus he will still be consid the legal tenant unless hi sublessor agre to sign a new leas with the landlord. Hopefulli he will just have someon els make the leas paymentsA of thi moment..

the moral to thi stori is REA D THE LEA SE. Or even better,A gain. have an attornei read it for you. I have learn over the year to never sign a legal document of ani kind without let my attornei review it, especi if the document involv monei and my first born child.

Her ar a few other point to ponder befor sign a commerci lease.

then amort that over a 12 month span. For example,How is the leas payment calculated? The most basic equat for calcul a leas payment take the number of squar feet time the cost per squar foot. if you have 1,000 squar feet and the cost per squar foot is $12, the annual leas payment would be $12,000. Divid by 12 month the monthli leas payment would be $1,000. Again, thi is a simplifi scenario. These dai most commerci leas includ addit factor that affect the final price, such as rent increases, oper expens escalations, common area charges, etc.

for example? Will you have to pai for park privileg or janitori service? Who handl mainten and repairsWho pai for what? It' import that you understand exactli what you ar pai for. Are you respons for ani cost other than the rent? Will you be respons for pai your own utilities.?

I there an escal clause? It is typic that the leas contain what' known as an escal claus that allow the landlord to pass on increas build oper expens to the tenants. If your leas contain such a claus you should ask for a cap on the amount the leas payment mai rise over a given period of time. And if the escal claus is ever activ by the landlord you ar well within your right to ask for an item account of the expens that ar be consid as caus for your rais in rent.

he is within hi right to ask for the increase. However,What rent increas might there be? One veri import factor to know is this: if you do renew the leas how much can the landlord go up on the rent? It is expect that rent will increas as properti valu increase. If your landlord can rent the space for more than you agre to pai a year ago. it would be a nightmar if your rent suddenli doubl overnight. Negoti the increas befor you sign the lease. Most rent increas ar calcul by percentage, not by flat rates.

mani leas also renew automat for anoth term unless you give notic within 60 dai of expiration. Know when your leas expir and the time requir to give noticeRenew and terminations. Most leas requir that you give a minimum of 60 dai notic if you intend to termin the leas and vacat the property. As Homer learned..

I a person guarante required? What happen if your busi goe south and can no longer afford to make the leas payment? Are you then respons for pai the rent out of your own pocket? Probabl so. Most landlord insist on a person guarante from the owner or an offic of the business. Thi mean that even if you go out of busi you ar still person on the hook for the remaind of the lease.

clarifi all points. You should be clear on everi point in the lease. And if you ar not,Finally. ask for clarification. Exactli what space ar you leasing? Who is respons for repairs? What common area will you have access to? Who is respons for maintain the littl things, like keep the share restroom stock with soap, towels, and most importantly, toilet paper.