Once you have settled on a space and reached an agreement on basic things like rent and lease length, it is time to deal with the formal, detailed elements of a lease. It is crucial that you head into this step with an understanding of common clauses found in commercial leases to avoid any traps and help you negotiate for changes in your favor. Here is a list of a few common lease clauses to have some background on:
1. Parties. A lease usually begins by naming the landlord and tenant in a clause called “Parties.” This may seem like a fairly basic part of the lease, but it is important to look closely at it to make sure your business’s exact legal name is used. If there is an error in the way you are identified—for instance, if you are a corporation or LLC and give your personal instead of corporate name, you could become personally responsible for the lease, opening you up to personal liability.
2. Premises Clause. Also at the beginning of your lease will be a clause typically titled “Premises” that identifies the space you area leasing. If the space is an entire building, this clause should simply include the address, but if it is a more specific space, you need to make sure that your space is described in more detail. For instance, if you want access to things like parking lots, storage rooms, kitchen facilities, conference rooms, or other amenities, you will want the lease to list those specifically.
Make sure that there are no surprises on your lease by being prepared when you enter negotiations!