HOW TO SAVE MONEY ON A COMMERCIAL LEASE
On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in commercial real estate on Wednesday, April 18, 2018.
A commercial property lease can be the single biggest expense a business has every month — which directly affects a company’s bottom line. For many budding entrepreneurs, the cost of the lease will spiral out of control simply because they don’t know how to look for ways to cut costs.
Here are some areas of any commercial lease that bear reviewing:
Property taxes
Make sure that you’re paying, at most, only your share of the total taxes and that your obligation doesn’t extend beyond the lease. That can happen, for example, if the landlord has the taxes on an installment plan and the next installment becomes due at the end of the lease. You could otherwise be stuck covering taxes for years you aren’t even in residence.
Disability requirements
Compliance demands and consumer lawsuits regarding the Americans with Disabilities Act (ADA) has become a hot-button issue for many commercial tenants. If your lease doesn’t put the obligation for renovations to ensure compliance on the landlord, you could be hit with fines and forced to make the changes yourself.
Maintenance and repairs
Pay a lot of attention to clauses in your lease regarding this issue. You don’t want to assume responsibility for all maintenance issues, including plumbing, electrical and structural problems. Make sure that your obligation is limited to cosmetic or surface conditions only.
Operating expenses
Also known as common area expenses or maintenance, this is the No. 1 thing that can drive up a tenant’s monthly costs unnecessarily. Review exactly what your landlord provides and determine exactly how much of the building’s common areas represent your share. You can negotiate for a number of standard exclusions — but only if you ask for them! No landlord is going to voluntarily reduce his or her profits unless prompted.
The key to a successful commercial lease is to remember that — unlike residential leases — virtually everything is negotiable. Just make sure you do the negotiations before you sign!
Source: The Space Place, ““Are You Losing Money?” 10 Common Pitfalls for Commercial Tenants to Avoid,” accessed April 12, 2018
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