Understanding a Typical Commercial Lease of Property; Terms, Conditions, Clauses & More

The lease for your commercial space can significantly impact your business. There are many things to consider before signing the lease, and understanding your lease is essential. If you are ever in doubt, you should consult with your attorney. Today, we at Kajioka & Associates, Attorneys at Law, would like to relate some of the key points you should be aware of for your Las Vegas, NV commercial lease.

Commercial Lease Term, Use & Rental

A designated period of time you are comfortable with and can calculate into your budget as you plan for your business is the Term in your lease. If needed, consider the renewal terms and options. Your lease will most likely have to match the term of your loan should you require financing for the lease. To ensure no competitors are accepted in the same area after your lease is in effect, an Exclusive Use term may come in handy as well. Though often overlooked, the Use should clearly be defined. When it comes to these terms, landlords tend to be more restrictive than approachable. As your business expands, consider the possibilities of what you may want to use the space for. Including the rent and payable installments, the Rental information is simple enough. Just ensure details agreed upon by both parties or stated in the Letter of Intent, like deposits for example.

Commercial Property Leasing Damages, Maintenance & Operating Expenses

Oftentimes negotiated with your landlord, the damages, maintenance, and operating expenses are major points to discuss. Damages alone can be its own topic of discussion. The clarification of who is responsible for major damages needs to be clarified. The damages are frequently similar to what you will find are covered by adequate insurance. The terms of the rent should be clearly stated as well during this repair period. Should there be significant damage to the property, you’ll also want to negotiate the right to terminate the lease. Maintenance can be a tricky part to the lease agreement. It’s not uncommon for landlords to pin HVAC repairs and maintenance on tenants in Nevada. Before signing the lease, you should have the condition of the HVAC system checked and are in working order to avoid inheriting costly repairs. Keep in mind maintenance and repairs can be expensive so perhaps negotiating a 50/50 split for maintenance at the least and repairs if you can swing it, for all big-ticket items including the HVAC system.

CAM or Common Area Maintenance Agreement

CAM is a term you need to be familiar with. Even though they are not directly leased, you as a tenant will likely be responsible for shared areas with other tenants. would be best to request a statement of these costs to ensure that you are not over paying for these services when you are discussing the CAM costs.

Guaranty, Subletting and Default of Commercial Lease

Familiarize with these terms as well as they are extremely important to any commercial lease. Especially if you are a small business, a guaranty is something that will intimidate many business owners. In case the business fails to meet its obligations, a landlord will require a guarantor to be named in the lease. This is normally the business owner, which eliminates liability protection of a business owner and weighs them down with the financial burden. Before signing, make certain you understand the specifics of the Guaranty. If you decide to sell, merge, or acquire a new business that will no longer be tied to your business, subletting may come into effect. Though new businesses shouldn’t have a worry for this term, is should still not be overlooked. The terms of your business defaulting will be the hardest for most to read and comprehend. This is a risk all businesses face. In the event it happens, your landlord should try to lessen the damage by finding and letting the space quickly after default and landlords are obligated to do it. As the landlord is not obligated to terminate the lease however, you will likely be responsible for the lease cost until a new tenant takes over or until the term of your lease is over.

Criminal Defense, Personal Injury, Business Attorneys & More in Greater Las Vegas, Nevada

There are many elements to the lease that inexperienced business owners may not fully understand or know what is customary or if a landlord is being out of line. Before you sign a lease, come see the experts of Kajioka & Associates, Attorneys at Law and we will help you understand the lease and offer advice on potential changes. Contact us today!