Top 6 Tips before signing a Commercial Real Estate Lease
Many business owners make the mistake of signing a lease too quickly after getting a seemingly great offer. They forget that once they sign, they can’t back out. That is why it is critical to double-check everything before proceeding.
Payas CRE has created a list of everything you should research before signing any real estate lease.
Read the entire lease agreement.
Nobody like reading extensive contracts, but it’s necessary when it comes to real estate leases. Many landlords utilize standard leases with broad wording, yet they might still make mistakes and leave anything out of your agreement. Worse, they can easily include a clause that you don’t agree with. So make sure you read the entire lease and check with a commercial real estate professional that specializes in leases to see that everything is in order.
Do not rush the negotiation process.
In each real estate transaction, negotiations are key. You should never rush them, and you should never accept the first landlord offer you receive. Refuse and try to bargain for a lower price or other concessions such as facility charges, pass-through protections, or tenant upgrades. Important tip: Be ready to walk away at any time. If you show that willingness, the landlord will see you differently, and you’ll be in a position to get much more than you had hoped for.
Check the CAM fee’s.
CAM costs, also known as common area maintenance fees, are an important aspect of every commercial real estate contract. They specify how much of the building’s maintenance you are responsible for and how much the landlord is responsible for. The charge should be based on the percentage of the building you will rent, but unscrupulous landlords try to raise the fees regardless of the percentage of your part. It should also be evaluated and authorized what fees should be included in the CAM fees. Remember that CAM costs may and should be negotiated.
Is There a Provision for Arbitration in the lease agreement?
Because disagreements are inevitable, your lease should include an arbitration clause. Although most do, not all will include this clause. Check to see if yours does, and if it allows you the ability to participate in arbitrator selection and other arbitration-related decisions if anything comes up in the future.
Conduct a professional assessment of the property before signing the paperwork.
Even though the property appears to be in good condition, a professional inspection of the location and the structure is required. It will ensure that everything goes as planned and there are no surprised after you closed the deal.
Hire a local CRE agent with experience.
Before you sign the lease, a professional CRE agent will advise you, give recommendations for service providers to make sure you’ve covered all the bases like attorneys, inspectors, and expeditors. It’s best to hire an experienced real estate agent before making any decisions. They will help you find the best deals and they can also help you with the negotiation process.