6 Items to Check in Your Commercial Lease Agreement

When you find the ideal space for your business, you want to jump in with both feet and start making the most of your space. But first, you have to make sure that your commercial lease agreement is in order. Slight changes in your agreement can cost you a significant amount of money or alter your future plans. Documentation is important – while examining the following clauses and items, remember that what is written is key. Even if a leasing specialist tells you something different when you see the space, you’ll ultimately be bound to the terms of your written contract.

1. Address and Named Parties

Ensure that the address of the leased property and the named parties are accurate. Since this is a commercial lease, you should make sure the lease is in your company’s name to limit your personal liabilities. Verify that the address in the document is the same as the property you viewed.

2. Responsibility for Utilities

Your lease should explicitly outline who is responsible for each utility. This is particularly important for commercial leases, since water, electric, and trash removal bills are often a significant part of a company’s expenses.

3. Insurance Coverage and Requirements

In most rental agreements, the landlord’s insurance does not cover your business property and assets. You may be required to purchase additional insurance to cover your items or assume the risk of damage caused by natural damage or burglary.

4. Acceleration Clause

Some commercial leases include an acceleration clause. This clause allows the landlord to demand the remainder of the rent due for the remainder of the contract if certain conditions are met. Leases often contain this clause to protect the landlords from consistently late payments; with this clause, the landlord can ensure that rent is paid without taking a tenant to court. If the contract includes this clause, make sure you know exactly what triggers it.

5. Renewal Clause

If you want to establish a presence in the community, you’ll likely want a rental agreement that allows you to renew your lease at the end of the term with similar conditions. Some lease agreements include clauses for automatic renewal. Check this section to know what type of notice is required and what your obligations are for renewal.

6. Subletting

Some commercial lease agreements allow you to sublet part or all of the property, while others expressly forbid it. Either way, it’s important to know what is permitted and what your obligations are if you take on subletters.

Clear, fair contracts are a crucial part of any business. Get your current contracts reviewed for accuracy or draft new agreements with Goodwin Law & Mediation by clicking here.

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Goodwin Law & Mediation

At Goodwin Law & Mediation, we strive to fill an important niche in North Carolina legal services. Attorney Raymond Goodwin has a significant body of legal experience and a wealth of knowledge that he brings to the table to develop personalized solutions for a range of legal issues.

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