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Commercial Lease Mistakes That Have To Be Avoided

By Jamie Richardson | October 2, 2018

Negotiating commercial leases for office spaces or business locations is highly confusing for most business owners. A lease will instantly establish a relationship with the landlord. It includes regulations and rules for all day-to-day relationships. It even includes what happens in the event that something goes wrong.

Tenants and landlords tend to discuss many important things like concessions and base rent before the lease is signed. However, many other things need to be known about the process. If you want to get a better deal, you want to avoid the following mistakes highlighted by MJ Freeway’s cannabis business experts.

Negotiating Alone
It is a bad idea to negotiate leases alone. You want to hire someone that has experience to represent you. The qualified Commercial Land Broker has experience in the desired market and automatically understands business needs you might have. Such a broker tends to work with trusted legal counsels and help businesses a lot to avoid many potential lease agreement oversights. When you have someone that is experienced with you, there is a huge possibility that the deal signed will be much more in your favor.

Signing Standard Lease Agreements
If this is what you do instead of negotiating, business future remains in the hands of the landlord. A standard lease agreement means the business ends up taking financial burdens for most damages that happen. You want to take the needed time to negotiate lease terms. This is what protects the business from something that is unexpected in the future.

Not Taking Into Account or Knowing Rate Fluctuations
Is the lease including a mention that landlords can re-evaluate space during leases and up some rates, like water or electricity? As you sign the lease you pay reasonable rates but can end up with landlords tripling costs by the time the year ends. You want to protect yourself from this and make sure that all rate increase terms are included in the contract.

Pre-Existing Condition Clauses
This is a clause that practically means the space needs to be returned to original layout when the lease period is over. It includes every modification you made, like repainting, demolishing walls and removing floors. You want to assess the changes that are going to be made and see if this is a clause that should be in or not. Costs can easily balloon if you have to make changes twice in the future.

Not Taking Real Estate Taxes into Account
Always be aware of the real estate tax that you are fully responsible for. Know how much you have to pay and what will happen in the event rates go up. If you do not do this you can be sure that the landlords are going to increase tax portions more than what is proportional to tax hikes.

Final Thoughts
No matter how friendly the landlord is, he/she always wants profit. In fact, the higher the profit, the better! You cannot blindly trust anyone in real estate, especially when referring to commercial properties. This would be a huge mistake.

Jamie is a 5-year freelance writer who enjoys real estate. He is currently a Realty Biz News Contributor.
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