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Negotiating a Commercial Lease

Posted by: Rod Kurtz on August 15, 2006

If you’re like most small-business owners, your business is located in leased space. When it comes to commercial leases, keep one thing in mind: Leases are binding contracts. Unlike residential tenants who benefit from generous state protections, the rights of commercial tenants are almost entirely defined by the specific terms of the lease. The lease you sign today could affect your business’ bottom line for years to come.

Three things to consider before you sign your next lease:

1. Negotiate your lease agreement. Any standard lease that a landlord offers you is more of a landlord’s wish list than a reflection of what a typical lease looks like. Look at it as the opening offer in the negotiation process. Take time to really read the lease. Try to think of everything that could go wrong and then see how the agreement would deal with that situation.

2. Focus on the small print. Don’t just focus on rent—make sure you consider other terms that may also cost money, such as parking, building services, renewing the lease, canceling the lease if the business fails, building compliance with the Americans with Disabilities Act, business signage, etc.

3. Plan for resolving disputes. Even if you’ve negotiated a great lease agreement, disputes with your landlord can still occur. Remember that taking things into your own hands, without legal advice, can put you in a worse situation than you are in already. To be safe, check with an attorney as disputes arise.

Elizabeth Gaudio
Senior Executive Counsel, National Federation of Independent Business Legal Foundation

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