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Protect Your Kansas City Business: Understand the Potential Pitfalls of Commercial Leases

As a business owner you have to make a plethora of important decisions on a daily basis. However, no single decision may be as important to the success of your business as that of selecting the right location.. Not only is the location and overall space important, but also important is signing a favorable lease. Many business owners make the mistakes of assuming that commercial leases are pretty standard and the terms "boiler plate". However, commercial leases are not all created equally. Instead of negotiating the terms of the lease business owners often unknowingly sign a lease that could financially ruin not only their business, but could also possibly leave the business owner personally liable. Before you sign a commercial lease, be aware of these potential pitfalls:

  • Lease length is too long: When you find the perfect location for your business, it may be tempting to want to secure a lease for a long period of time. This can be a mistake. Typically longer leases only favor a landlord. A lease of three years to five years means that your business is responsible for all rent and fees for the entire lease period. Unlike residential leases, commercial leases are not easily broken. Therefore, after two years if you find that the space is no longer meeting your company's needs, you may be stuck.
  • Unfavorable or no renewal clause: Make sure the lease you sign contains a well-drafted renewal clause. There is no point in signing a two year lease if you have to move your business location once the lease expires, unless, of course, you are only looking for a temporary space. Otherwise, a renewal clause is a must.
  • Failure to scrutinize all fees: In addition to basic rent, landlords often charge additional fees. Before signing a lease, make sure you have calculated these fees into your decision. For example, common area maintenance or CAM charges can add a significant amount to the rent. Also be on the watch for "triple net" or "NNN" leases, which in addition to paying rent, the tenant is also responsible for a portion of the landlord's taxes, insurance and maintenance fees. These fees can significantly increase the monthly payment. Also often these charges are vary, which can make it difficult to budget for.
  • Rely on oral promises: There is an old saying that states that an "oral contract is not worth the paper it is written on." There is a lot of truth in that statement, especially when you apply it to a commercial lease. If the landlord promises you something, and that something is important to you, make sure it is added to the written lease. If the landlord is reluctant to add the terms to the written lease-be prepared to walk away.
  • Understand all lease terms: In reviewing a lease, make sure that you have a crystal clear understanding of all lease terms, including your obligations. Since commercial leases are not standard like most residential leases, it is important to have a firm grasp of the language in the lease, but also the language that may be "missing". It is also a wise idea to have a seasoned business attorney review the lease before signing. An attorney can not only give you piece of mind, but can save you thousands of dollars in rent and fees that a poorly drafted lease agreement could cost you and your business.

If you are searching for an attorney who can protect your business interests, contact the Hyland Law Firm, LLC today. For more than two decades, seasoned business attorney Charles Hyland has provided top-notch legal services to business owners. Call 913-498-1911 now to schedule your free and confidential consultation.

Tags: Kansas City Personal Injury Attorney

This entry was posted on Tuesday, November 12th, 2013 at 9:13 pm and is filed under Personal Injury. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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