A commercial lease is a legal document dictating the rights and obligations of the lessor and the lessee. As a business owner, you must comply with all the terms and conditions in your commercial lease agreement. It is vital to understand your responsibilities under the lease to protect your business and avoid unnecessary expenses or interruptions. Here are some of the critical obligations you should consider.
1. Rent Payments
Rent is the primary tenant’s legal obligation in any commercial lease agreement and is also a significant business expense. Understanding the rent payment terms can help you avoid overpayments or losing your lease prematurely.
Defaulting on your rent gives your landlord the right to terminate the lease or evict you. The details about your obligations on rent or additional payments can appear in multiple lease sections, so it’s important to study the entire document.
Most leases require you to ensure the property is in good order and take care of all non-structural maintenance issues that may arise. Sometimes, you may be required to pay a portion of the general operating expenses, taxes, and common area maintenance charges.
These obligations and terms can be complex for most business owners, and you may require legal advice before signing the contract. It’s essential to consult a reliable lawyer for a professional commercial lease review.
2. Renewal Deadlines and Requirements
Most business owners often negotiate flexible terms, including the option to renew, extend, or terminate the lease early. However, it is crucial to be vigilant since most of these options are time-sensitive.
Make sure to closely monitor the dates by which you must notify the landlord and observe all the terms in the lease options. If you miss the date, the landlord is under no obligation to honor your request and can even force you to pay more rent or disrupt business operations. While most lease agreements have the option to terminate early, the option may or may not attract a penalty, but some landlords allow you to pay a pre-negotiated amount.
3. Maintenance and Repairs
Commercial properties require various types of maintenance, and the lease agreement should specify the parties responsible for each. Most commercial leases require the tenant to take care of general upkeep to ensure the property maintains its condition from the start to the end of the lease. Maintenance obligations may include repairing cracked tiles, leaking taps, and cleaning the flooring.
The lease can also include things you cannot do, like restructuring the layout and ripping down walls. Similarly, the landlord should take care of structural issues like leaking roofs and sagging foundations. Since the lease explains specific obligations for each party, it is vital to read and understand your responsibilities and make sure you deal with any issue.
While commercial leases can vary from one use case to another, it is essential to understand the relevant terms and obligations. Understanding your responsibilities in a commercial lease can help you negotiate the terms and ensure the commercial premise is right for your business.
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