What You Need To Know Before Signing A Commercial Real Estate Lease

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Many business owners make a mistake by rushing into signing a lease after making a seemingly fantastic deal. They forget that after signing, there’s no going back. That’s why it’s essential to make sure everything is in order before doing so.

With that in mind, we wanted to tell you all the things you should look into before you finally sign any real estate lease.

Read and Understand the Entire Lease

Nobody likes reading long contracts, but when it comes to real estate leases, you need to. Many landlords use standard leases with general terms, but they can still make mistakes and forget to add something specific to your deal. What’s worse, they can easily add a clause that you might not like. Also, even if the lease is a “standard” form, you can still negotiate the language to protect you better.

So make sure you read the entire lease and check with a commercial real estate lawyer that specializes in leases to see that everything is in order.

Don’t Rush the Negotiations

The negotiations are crucial in any real estate deal. You should never rush them, and you should never accept the first offer you get from the landlord. Refuse and try to negotiate the price or other concessions like facility costs, pass-through protections or tenant improvements.

Important advice: Always be prepared to walk away. If you portray that willingness, the landlord will look at you in a different light, and you’ll be in a position from which you can get much more than you have previously hoped to get.

Are the CAM Fees All Right with You?

The common area maintenance or CAM fees are an essential part of any commercial real estate lease. They state how much of the building’s maintenance you’ll have to cover and how much the landlord will cover. The fee should be based on the percentage of the building you’ll rent, but some landlords try to increase the fees even if that doesn’t correspond to the percentage of your part. Also, what fees should be included in the CAM fees should be reviewed and approved.

Remember, you can, and you should negotiate CAM fees.

Is There an Arbitration Clause?

Disputes can always happen, which is why your lease should have an arbitration clause in it. Most do, but not all will contain this clause. Make sure you check if yours does and if it gives you the right to participate in the selection of an arbitrator and other decisions that relate to arbitration.

Make Sure You Do a Professional Assessment of the Property Beforehand

Even if the property looks good, it’s still essential to get a professional to assess the location and the building itself. It will ensure everything is the way it was promised. What’s more, only an expert can do a proper assessment of the building.

Hire Experienced Agents

Before reaching any deal, it’s best to hire the service of an experienced real estate agent. They are not only great at finding you the best deals possible, but they can also assist you in the negotiation process. A good agent will advise you, make recommendations for service providers that specialize in this field (attorneys, inspectors, expeditors, etc…), and ensure you cover everything that matters before you sign the lease.

For more information, you can reach us at joe@joekillinger.co

Written by

Entrepreneur-Investor-Founder. Posting tips and insights from my experiences in real estate, investing & entrepreneurship- https://www.joekillinger.co/

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