Questions to Ask Your Landlord Before Closing on Your Commercial Lease

You are preparing to sign a commercial lease and you cannot wait to start business activities as soon as possible. But patience has its rewards, and you should spend a little time asking questions of the landlord before you put your final signature on the dotted line.

How long is the term of the lease?

Even though you had negotiated the term of the lease with the landlord, there are many things that can happen between your negotiations and the signing of the lease. The landlord might not have made notes on the term you wanted and it did not get included in the final paperwork, or the landlord might have a standard term and ignored your request for a special term completely. In either case, it is to your benefit to read the lease and ask about the term to make sure it is exactly what you want.

How much are the rent and deposit?

Whenever you sign a commercial lease, it is critically important that you read it over first to make sure that you get the conditions you negotiated. You need to ask the landlord how much of a deposit they are requiring and how much the monthly rent will be, and then compare those numbers to the lease itself. It is up to you as the tenant to make sure that the lease you are signing matches the lease you negotiated.

Is there a provision for rent going up?

If you are signing a long-term lease, then it is normal for the landlord to include a clause about a rise in rent from year to year. If that wording is not in the lease, then ask the landlord how they intend on informing you of rent increases. It is dangerous to not have the rent increases mapped out in the lease because if your business becomes successful, the landlord might feel obliged to significantly raise your rent.

Are you allowed to sublet portions of your space?

In the business world, things can change quickly and you might find yourself downsizing to save money. If you are cutting back on operations to save money, then you obviously do not want to keep spending the same amount on your leased space. When this happens, businesses like to sublet their empty space to other companies. The problem is that not every landlord allows tenants to sublet, and it might even be in the contract that you cannot sublet. This is something you should discuss with your landlord before you sign your lease.

What insurance does the landlord have in place?

A good business owner always wants to have plenty of insurance coverage to help their business survive financial challenges, but it is difficult to get the right insurance when you are not sure what you need. Ask your landlord what insurance they have in place that protects your business in any way, and then use that information to get the precise coverage you need for your business.

The commercial lease you sign will determine the success or failure of your business for a long time. Before you sign on the dotted line, be sure to ask the right questions and understand your lease terms fully and completely.