You have found the perfect office space for your company and now it’s time to sign on the dotted line and make it official – but what things should you ensure that you have in that office lease? After the ink has dried on the lease, there is no turning back, so make sure you don’t forget these five must-haves when signing an office lease.
A Solid Understanding
Yes, you NEED to read the lease even though it is a long document. Do the definitions align with your understanding? If you don’t understand something in the lease, the time to ask questions is before you sign, not after. Make a special note to look at the terms such as the right to cancel. Many landlords will use standard leases that includes general terms for all leases. If you have negotiated specific things, you need to make sure those are included in the lease. Check the start date, end date, rent, rent escalation, and other special terms you negotiated.
The Best Possible Negotiations
Just because you have the lease in hand, does not mean you cannot continue to negotiate until you have the terms you want. Until the lease is signed, you have room to negotiate. When reading the lease, make a list of provisions that you would like changed and give it to your broker.
Knowledge of Your Responsibility for Capital Expenditures
Capital expenditures includes major structural expenditures like the roof, foundation, HVAC and any other major repairs and replacements necessary. The standard varies from property to property, but you should try to avoid signing a lease that places the burden of these repairs on the tenants.
Is the Lease Assignable?
Check to see if the landlord has the right to terminate the lease if you ask for an assignment. If you sell your business, you want to be able to have someone else take on the lease. Many businesses look at location as the biggest piece of value and some will try to assign a lease in order to get out of it, although the landlord will still want to renegotiate the terms with the assignee. If the landlord has the right to terminate the lease once you ask for an assignment, this could kill the sale. Negotiate for the landlord to remove this provision or allow it to be modified so that it doesn’t apply in the event that you sell your business.
Can You Sublease?
A sublessee is another business that works in your leased space under your lease terms. You pay the lease and the other party pays you a portion of the cost. A lot of landlords do not allow subleases, but if you want a sublessee, you will need to negotiate this with the landlord before signing the lease.
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