5 Things to Do Before Signing Your First Commercial Lease
<p>That's the one, you found it: the perfect space for your business! You can already see yourself welcoming your first customers there. You're about to take a major step in your entrepreneurial journey. But be careful because a commercial lease is not a contract to be taken lightly. This is an important commitment that deserves your full attention.</p>
<h3><strong>The differences between a commercial lease and a residential lease</strong></h3>
<p>First, you should know that a commercial lease is very different from a residential lease. When it comes to your business, you often sign a lease for the medium or long term. Most commercial leases have a term of three to ten years. That means, it's not a decision to be taken lightly! In addition, a security deposit equivalent to several months' rent may be required. This is completely legal in the context of a commercial rental.</p>
<p>Another important distinction is that the clauses of a residential lease are generally standardized; however, those of a commercial lease vary greatly from one contract to another and can be particularly complex. There are also fewer regulations on the commercial side to protect tenants. We therefore suggest you work with a legal professional, such as a notary or a lawyer, to avoid unpleasant surprises.</p>
<h3><strong>What you need to do before signing your first commercial lease</strong></h3>
<p>Although a legal advisor can help you in this process, you need to prepare for this important step. Here are some practical steps you can take to ensure that signing your first commercial lease goes smoothly.</p>
<p><strong>1. Know the different types of commercial leases.</strong></p>
<p>The type of commercial lease you sign has a direct impact on your budget. Your rent could be fixed or fluctuate depending on various factors. Here are the five main types of commercial leases.</p>
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<p>The gross lease: Your rent is fixed from the start and doesn't change, even if your landlord's expenses fluctuate.</p>
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<p>The net lease: you pay a base rent plus additional fees, such as a portion of property taxes, calculated according to the surface area of your premises. That means these fees can vary from year to year.</p>
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<p>The double net lease: it works in the same way as the net lease, but the additional costs also include part of the building's insurance.</p>
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<p>The triple net lease: it includes the same fees as the double net lease as well as those related to the maintenance of the building. You receive a bill from the landlord to cover these expenses.</p>
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<p>The percentage lease: in addition to your basic rent, you must pay part of your gross revenue to the landlord to a certain threshold.</p>
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<p>The differences between these leases directly impact your monthly budget. It is therefore essential that you know your lease type well to anticipate the costs and determine if you have the necessary funds.</p>
<p><strong>2. Check the zoning and permits required.</strong></p>
<p>Has a spot caught your eye? Its location is perfect, its size suits you, you already know how you are going to decorate it... But do you have the right to do business there? Generally, the owner will make sure that your business meets the permits, but this may be your responsibility. You can confirm with the municipality that your business can legally operate in this location.</p>
<p>In addition, certain types of businesses require an operating permit or a certificate of occupancy. Make sure you have this document on hand before signing the lease.</p>
<p><strong>3. Negotiate the lease term and exit conditions intelligently.</strong></p>
<p>The length of a commercial lease may seem long, especially if your business is young. What suits you today may not be suitable in five years. For example, your needs may change, you may change careers, or your business may experience rapid growth requiring more space.</p>
<p>It is therefore crucial to provide exit clauses before signing the lease. Ask yourself:</p>
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<p>Will I be able to sublet my lease?</p>
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<p>Does the contract include a termination clause, and what are the conditions?</p>
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<p>What penalties apply if I leave before the renewal date?</p>
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<p>What notice period do I have to respect?</p>
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<p>Think about all possible scenarios and make sure everything is written in black and white in your lease to protect yourself.</p>
<p><strong>4. Clarify your insurance and work obligations.</strong></p>
<p>Generally, landlords already have insurance for their buildings and common areas, but that doesn't mean you shouldn't have insurance too! As a tenant, you need to protect your business against damage that may occur in your rental space, whether you are responsible for it or not. Your landlord may require you to have insurance that covers certain types of damage.</p>
<p>Over the years, maintenance will certainly have to be carried out in your rental area. Depending on the type, it may be your responsibility. Generally, you will have to take care of small maintenance repairs and restore the area to its original condition at the end of the lease. Your landlord will have to provide you the rental space in good condition and carry out the necessary repairs in your rental and in their building. Clearly defining these responsibilities in your lease will help you avoid costly arguments and misunderstandings with your landlord.</p>
<p><strong>5. Determine who will be appointed as the lease manager.</strong></p>
<p>While your business or corporation can legally sign a commercial lease, some landlords require a representative to take on this responsibility. This means that you, as a manager, could be held personally liable if your company does not meet its commitments. This is an additional guarantee for the landlord, who ensures that they have direct recourse in the event of a problem.</p>
<p>Signing a commercial lease represents a major turning point for your business. By understanding the issues and surrounding yourself with the right people, you can lay a solid foundation for your success. Take the time to ask all your questions and clarify important clauses. After all, this place will become the heart of your business and the scene of your future success. It deserves your full attention!</p>
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<p>Roxane has always written and dreamed of making a living from her pen. Now a web editor, proofreader and author, we can say that it's mission accomplished.</p>