San Jose Business Lawyers Blog
When a business in Texas is either establishing its first location is looking to upgrade to a bigger space, a commercial lease is often something requiring a business owner’s signature and can be tricky to navigate. You should work with a Texas business attorney to be sure that you are getting the best offer for all of your immediate and long-term needs.
It is important for business owners to understand that commercial tenants often do not have the same rights as residential tenants. For this reason, legal representation is highly advisable because many commercial leases will be seeking long-term arrangements that can involve significant cost concerns.
Common Commercial Lease Questions to Ask
A facility may be the most considerable operating expense for any business in Texas. Such costs are why people need to be sure to ask themselves several questions about any commercial lease offer, including all of the following:
How long does the lease last?
A commercial lease may run for several years and thus involve a significant financial commitment. When a company is new or is experiencing rapid growth, it can be a mistake to commit to one space for too many years, so you may want to negotiate for a reduction in how long you must stay.
Will the location be a good fit?
Location is always important to real estate agreements, and it can be a major factor in many commercial leases. Your location can play a major role in how your business is can grow.
Know what other businesses will be around you and what kind of access you have to major streets.
When can you break the lease?
You must be aware that landlords often include terms making commercial tenants responsible for rent even if a business fails. You may want to seek a clause allowing you to terminate a lease in certain circumstances, or that can limit how much a landlord will charge you if your company closes.
A force majeure clause allows tenants to remove liability for unforeseeable and unavoidable catastrophes interrupting regular business activities and could allow you to terminate a lease if a natural disaster or other situation outside of your control forces your business to close.
How much will the rent increase each year?
Several commercial leases have annual percentage rent increases built in, but these need to be spelled out clearly in a lease agreement. Try to have a lease written with an option to renew at a predefined increase rate.
When you do not have an option to renew, a rent increase might be substantial at the time you renew. This can mean either paying a significantly higher rate or paying excessive costs to move to another location.
Do you understand the CAM terms?
The term CAM is used as an abbreviation for common area maintenance, and you should be allocated a percentage of the CAM fees you will be responsible for. A fee is usually based on the percentage of the building you are renting, but you want to be sure your percentage is based upon the overall size of the building and does not vary based on how much of the building is rented out at any point in time.
Make sure that you will not be paying for concerns relating to a landlord’s marketing efforts or their legal fees relating to negotiating leases with other tenants. You have the power to negotiate CAM terms, so make sure you strike any administration fees of more than 3 percent, benefits for a landlord’s employees, or build-out costs for other lease units.
What are your obligations as a tenant?
Landlords can pass on the cost of maintaining a building to their tenants, and you could be responsible for certain maintenance and repair expenses at a facility. Try to negotiate so your landlord does not place all responsibilities for mechanical maintenance on you.
Call Us Today to Speak with a Texas Business Attorney
Are you in the process of seeking a commercial lease in Texas? You will want to be sure that you have a Texas business lawyer on your side so you can get the best agreement possible that will serve the interests of your business today and well into the future.
Structure Law Group handles all kinds of commercial lease concerns and knows how to help people negotiate far more favorable agreements than what they might be initially offered. You may call (512) 881-7500 or contact us online to schedule a consultation with our Texas business attorney.