Many tenants are prepared to sign a landlord’s standard lease without really considering their business’s needs or engaging in serious negotiation. Here are a few examples of things your business might consider before signing your lease:
- Landlords sometimes tie increases in rent to the CPI, or Consumer Price Index. What is the rationale for this and what are some common pitfalls of this clause?
- Often start-up businesses are planning to incorporate, but have not yet done so when they sign their lease. What are the ramifications if this occurs?
- How can 501C businesses seek financial benefit from their non-profit status?
- Is it better for a tenant if a lease says it will “gross-up” operating expenses or if the “gross-up” is determined as if the building was 95% leased?
- What are the most common items that careful tenants request to be excluded from the meaning of “operating expense”?
- The landlord takes care of any future issues that might be harmful to them, but what are the negotiating positions of the tenant?
- What are some compromise positions in a lease that will protect a tenant from having to pay for necessary services that are not delivered?
- Does the lease provide for the landlord to be able to relocate a tenant to a “similar” space? If so, what tenant concerns about this possibility should the lease address?
- What liability limitations should the tenant seek to include in the lease?
This list represents just a few specific considerations a tenant might keep in mind. Researching what questions to ask specific to your business can help make you as a tenant more prepared to negotiate a lease.