Some Important Things to Consider Before Signing a Lease for an Office

    Moving into a new office or commercial property should be an exciting time for any small business owner – this is the start of the next step in your adventure!

    Unfortunately, the process doesn’t always go swimmingly well. While that can be down to unscrupulous landlords and the confusing small print in their contracts, ultimately, the buck stops with you to iron out any issues before signing on the dotted line. 

    There are other pitfalls that small business owners need to be wary of when it comes to leasing new office space. In this article, we have looked at some of the most common issues that can emerge to help you avoid falling into the trap.

    Hopefully, that will ensure your office move goes without a hitch!

    Signed, sealed, and delivered

    When you have agreed on a rental with a landlord or commercial real estate agency, have you read the small print of your contract?

    And we mean, really read the small print, leaving no word unskimmed?

    This is your first layer of protection because ultimately, if you lock yourself into a contract that doesn’t work for your business, then realistically, you only have yourself to blame.

    But don’t be unduly worried because if there are any areas that you are unsure about, then you can seek clarification. Remember, it’s essential to do this before you sign, as there may be fees for breaking your contract after it has been agreed.

    It’s worth noting that some landlords use generic contract terms and conditions, so if you have agreed on something that goes beyond those, then ensure the documentation reflects that in writing. 

    Understanding your responsibilities

    Many things can go wrong with your office space, so you need to know whose responsibility it is to fix the problem.

    Is it your duty to sort out a dodgy internet connection, a dripping tap, or a leaking roof? The reality is that all commercial leases will differ. It is essential you understand which areas of a building’s maintenance are your responsibility and are your cost to bear. 

    This will often be covered under the ‘capital expenditures’ section of a lease agreement. If you have any concerns about this, do not be afraid to discuss these with your landlord/estate agent – it could be the difference between a repair bill for your business or the landlord’s expense. 

    The personal guarantee

    It’s a sad state of affairs, but it is a sign of the times that small businesses across the United States are forced into liquidation each day.

    So you can imagine a situation where a company signs a commercial lease on an office for 24 months but then ends up going out of business after just a year.

    The shortfall is not just written off in many cases. That’s why your lease may feature a ‘personal guarantee’ clause, which dictates that a business owner is liable for paying for any time left on the agreement.

    That can be a daunting prospect, so it’s well worth seeing if your landlord/agent is amenable to negotiating the terms of your lease. 

    Insurance and property taxes

    The question of insurance in an office lease is an interesting one. Your landlord should typically insure the office building itself and the contents within. However, other aspects – such as business interruption and workers’ compensation insurance – can be unique to each lease agreement. 

    You must have workers’ comp in place to protect your business should one of your employees have an accident at work – it could save you from having to foot any medical bills. On rare occasions, your office lease may have such cover in place already; however, if it doesn’t, then consider the options of workers comp insurance at – you may live to regret it if you don’t. 

    As far as taxation is concerned, there may be taxes for which you are liable and those that your landlord must pay. They will be detailed within the lease. If there isn’t a taxation section in your agreement, it is worth seeking clarification to avoid an eventuality you may not have budgeted for. 

    Understandably, you might be fearful ahead of taking out your lease on a new office block but remember the positives to be gained. It is ultimately about expanding your business and securing forward progression. And if you are in any doubt about the terms of your lease, be sure to consult a contract law expert before signing. That could be one of the most cost-effective purchases you make.


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