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Costs to consider before signing a commercial lease

On Behalf of | May 13, 2020 | Estate Planning

As a business owner there are many factors to consider before signing a commercial lease. Some of the most important considerations are the costs and expenses you will incur as a tenant other than regular payment of rent. Understanding how the following costs are addressed in your commercial lease is a good way to help ensure the financial well-being of your business.

Maintenance costs

Your lease needs to give details on each party’s maintenance and repairs responsibilities. It is important to know who is responsible for the cost of replacing major systems and making routine repairs. By making sure the responsibilities of each party are clearly stated, you can anticipate future expenses and avoid later disputes.

Additional charges

Commercial leases typically charge tenants for certain expenses in addition to rent. Be sure your lease states exactly what you will pay for taxes, insurance and common area maintenance. The lease should also clearly state when and where payments are due.  Generic terms such as “fees” should be defined to state exactly what you will be paying, and the lease should include clear formulas for any charges or expenses that are to be calculated.

Upfit costs

Many businesses will require substantial alterations to a commercial space in order for that space to meet the specific needs of their business. If your business requires alterations to the space you wish to lease, make sure the lease clearly states (a) which party is responsible for performing and paying for the work, (b) which improvements to the space may be removed at the end of your lease term, and (c) that the plans and specifications for the construction work have been approved by both parties.