Commercial Lease Checklist

It's crucial to understand from the get-go that, practically and legally speaking, there are oceans of differences between commercial leases and residential leases. Commercial leases are not subject to most consumer protection laws that govern residential leases - for example, there are no caps on deposits or rules protecting a tenant's privacy. Keep in mind that besides the amount of the rent, other less conspicuous items spelled out in the lease may be just as crucial to your business's success. For instance, if you expect your shoe repair business to depend largely on walk-in customers, be sure that your lease establishes your right to put up a sign that's visible from the street. And if you are counting on being the only sandwich shop inside a new commercial complex, make sure your lease prevents the landlord from leasing to a competitor.

The following checklist includes many items that are often addressed in commercial leases. Pay special attention to a few of the terms, including:

• rent, including allowable increases and method of computation
• security deposit and conditions for return
• length of lease - also called the lease term
• whether the rent you pay covers utilities, taxes and maintenance - called a gross lease; or whether you will be charged for these items separately - called a net or, if the tenant must cover three additional costs, a triple net lease
• whether there's an option to renew the lease
• if and how the lease may be terminated, including notice requirements
• what space is being rented, including common areas such as hallways, rest rooms and elevators
• specifications for signs, including where they may be placed
• whether there will be improvements, modifications or fixtures - often called buildouts - added to the space, who will pay for them and who will own them after the lease ends
• who will maintain the premises
• whether the lease may be assigned or sublet to another party,
• whether disputes must be mediated or arbitrated as an alternative to court

Copyright © 1999 Nolo.com Inc.

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