Commercial Leasing Agreements

Your business has grown to the point that you need to start looking for office space. Growth is an exciting time for any emerging business because the possibilities can seem limitless. Every small business wants to grow. However, if your startup business needs to relocate from your home garage to a full-fledged office space, you will need to learn more about commercial leasing and how to choose the right space for your business. A business law attorney can help you better understand commercial leasing and explain the various types of leasing options for your business.

Gross Lease

A gross Lease is a type of commercial lease by which the landlord pays for the building’s insurance, maintenance, and taxes. The tenant pays a flat monthly rental fee. In some cases, the landlord may pay for the occupant’s heat and electricity. However, most gross leases contain escalation clauses that allow the landlord to increase the rent each year to offset increased expenses incurred during the previous year.

Net Property

The opposite of a gross lease is a net lease. In a net lease, the tenant is responsible for certain costs related to the property. There are three types of net leases:

  • Single net lease: The tenant pays rent and property taxes
  • Double net lease: The tenant pays rent as well as property taxes and insurance for the property
  • Triple net Lease: The tense pays for rent, along with maintenance, insurance, and property taxes

Step-up Lease

A Step-up lease is often used in long-term leases that may last several years. The rent will increase by predetermined amounts at specified dates in the future. There are many pros and cons to a step-up lease. You should have your business law attorney review any step-up lease agreements carefully to avoid potential risks.

Fixed or Flat Lease

A Fixed or flat lease is a single rent that is set for a certain amount of time.

Cost of Living Lease

A cost of living lease agreement is structured according to the cost of living inthat area at that time. The rent will increase with inflation.

Percentage Lease

A percentage lease is a type of lease by which the tenant pays a base rent, along with a percentage of any profits earned while doing business on the rental property. The percentage is usually based on the monthly or annual sales made on the property. A percentage lease is often used by retailers who are leasing space on the premises. The business retailers will pay a base rent whether or not they make a profit. However, they will have to pay a percentage of revenue earned when profits are made from doing business on the property.

Contact a Business Law Attorney Before Signing a Lease Agreement

When determining the type of lease agreement you will use for your business, make sure the agreement meets your long-term goals. You should look at all aspects of the deal, not just the monthly payment. Some leasing options are better suited for certain types of businesses. Make sure you fully understand and read your leasing agreement before signing the dotted line. You should always have your business law attorney represent you and negotiate an agreement that fits not only your business needs but your wallet. Your attorney can make sure you will not be ripped off in the process.