02/12/2023

A crucial first step for any new business owner is signing a lease. You’ll probably need to make a reservation for a space for your company at some point, whether you’re opening a store, moving into an office, or renting out facilities for production. Finding the space you need can sometimes take years due to the complexity of the commercial real estate market.

When you finally find that space, the contract signing may seem like a tedious last step before you can settle in and concentrate on running your business. But a business lease is a significant document that necessitates some research, just like the majority of legal agreements.

When relocating from one location to another, Walter Gumersell, a partner with Rivkin Radler, said, “You have to do a lot of planning.” “Verify the conditions you’re going to accept.” Include provisions regarding, for instance, rent, a security deposit, the length of the lease, and how the space will be used. “You want that to be as broad as possible,” he said.

It should come as no surprise that a commercial lease’s fine print is crucial. Before signing a lease, there are two fundamental steps to follow: Do thorough research and be aware of the typical laws that are incorporated into commercial leases.

Verifying the landlord, identifying the owner of the building, learning about zoning regulations, and getting a sense of the neighborhood are all steps in the research process. Make sure you understand the payment schedule, your personal risk exposure, the transfer structure, the landlord’s preferred holdover rate, and any nuisance clauses in the lease before you sign it. These are some crucial things to watch out for, but bear in mind that state-specific commercial lease customs may differ.

Residential lease versus commercial lease

Every time a company rents a commercial property with the intention of operating from that location, a commercial lease is necessary. A commercial lease is a binding contract between a landlord and a tenant company, according to Nishank Khanna, chief marketing officer at Clarify Capital.

According to Khanna of Business News Daily, “the landlord agrees to rent out the commercial property, which is typically an office space, in exchange for money.” Commercial leases typically last three to five years, forging a lasting bond between the lessor and lessee.

There are some significant differences between a residential lease and a business lease, despite the fact that they may sound very similar. For one, while both involve a landlord renting space to a tenant in exchange for money, a residential lease cannot be used for business purposes.

Commercial leases, according to Khanna, “are less regulated and offer less protection than residential leases.” “They offer greater flexibility when it comes to negotiating conditions than residential lease agreements and are typically longer in duration.”

In contrast to commercial lease agreements, where it is very typical for the tenant to pay at least a portion of the property taxes, renters in residential lease agreements are typically not responsible for paying property taxes.