Make Sure You Understand Your Commercial Lease

Residential leases tend to be somewhat standard. Although they can differ from lease to lease, Florida statutes do regulate, to some extent, what landlords can and cannot do, and the burdens, duties and obligations of landlord and tenant.

But commercial leases aren’t the same thing. Commercial leases are very much the “wild west” of leases—there are few if any rules or regulations that govern commercial leases, meaning parties are free to contract to whatever provisions they want, no matter how fair or unfair the contractual terms may be to the other side.

That’s why commercial leases have so many terms that people are unfamiliar with. That’s dangerous, because if you sign to and agree to a lease with the wrong terms, you could find yourself in a good bit of trouble.

Understanding Net Rent

In a commercial lease, it’s easy to just look at your rent payment. Don’t—a typical commercial lease has many provisions that aren’t called rent, that can add to whatever you are paying on a monthly basis.

Net is the word that is normally used, for expenses paid beyond the base rent. A lease can be net, or double or triple net. The higher the net the more you pay—so, for example, in a typical triple net lease, you may pay utilities, taxes, insurances, repairs, taxes—basically, every single expense even remotely related to the property; you are essentially fully paying every penny of expense that the landlord has on the property.

Square Footage

Even if you know what your total rent will be, many times, rent is stated in terms of per square foot. Don’t make the mistake of assuming that means the square footage of your usable office or commercial space. In many cases, square footage may also include any common areas or shared amenities that you, and the other building tenants, use.

Build Out and Construction

You might already know that a typical construction contract can be complex, and lead to liability because of the uncertainties and the unexpected nature of construction projects. In many commercial properties, build out or construction on the property is necessary.

Who is paying for that construction? And regardless of who pays, who is liable for cost overruns, or delays, that may prevent you from moving in or doing business when you anticipated being able to do so?

Insurances

You may not think insurance is very expensive. But it can be, when your lease requires that you get insurance that insured the landlord, and anybody else who comes on the property. It may require that you insure to a limit that may be excessive, or more expensive than you may think that you need.

Indemnification

Be prepared to indemnify the landlord as well—that means that you’re promising to pay the landlord, should the landlord get sued for anything the landlord thinks that you caused.

Get help with your commercial lease–or any other contract that you sign. Call the West Palm Beach real estate lawyers at The Law Offices of Larry E. Bray today for help.

Sources:

blog.tenantbase.com/key-terms-in-a-commercial-lease-agreement

contractscounsel.com/t/us/commercial-lease-agreement#:~:text=Commercial%20leases%20are%20binding%20contracts,is%20responsible%20for%20building%20maintenance