Owners often fail to understand their leases, and this can be problematic. If your business is location-sensitive, then the status of your lease could be of paramount importance. Restaurants and retail businesses, for example, are usually location-dependent and their owners need to pay special attention to their leases. But every business owner should understand in detail the terms of their lease.
There are many key factors involving leases that should not be overlooked. If you adhere to the following guidelines, you’ll be much more likely to control your outcomes.
- If the rented property becomes available for sale, then it is often in your best interest as the business owner to try and buy the property, or you may be forced to move.
- When negotiating a lease, it is best to negotiate a way out of the lease if possible. This is particularly important for new businesses where the fate of a business is still an unknown. Experts recommend opting for a one-year lease with a long option period.
- You may want to sell your business at some point, therefore it is important to see if your landlord will allow for the transfer of the lease and what his or her requirements are for the transfer.
- Look at the big picture when signing a lease. For example, if your business is in a shopping centre, you should try to have it written into your lease that you are the only tenant that can engage in your type of business.
- If you’re located in a shopping centre, then try to outline in your agreement a reduction of your rent if an anchor store closes.
- Your lease should detail what your responsibilities are and what responsibilities your landlord holds. Keep in mind that if yours is a new business, it is quite possible that your landlord will require a personal guarantee from you, the owner.
- The dollar amount is not necessarily the most important factor in determining the quality of your lease. It is important to carefully assess every aspect of the lease and understand all its terms.
There are many other issues that should be taken into consideration when considering a lease:
- What happens in the event of a natural disaster or fire? Who will pay to rebuild?
- Is there a percentage clause and, if so, is that percentage clause reasonable?
- How are real estate taxes, grounds-keeping fees, and maintenance fees handled?
When your business relies on leasing space to carry out its operations, you have a lot invested in ensuring that space remains available to you and works to your advantage. Taking the time to understand every aspect of your lease will not only save you headaches in the long run, but it will also help to preserve the integrity of your business.