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What business owners need to know about commercial leases

On Behalf of | Oct 8, 2019 | Business Litigation

Commercial leases and residential leases are considerably different. A business owner looking for a new location in Florida needs to be prepared to identify the type of lease and to negotiate terms.

Per Forbes, here are the four basic types of commercial leases:

  • Net lease: The business owner pays utilities and property taxes. The landlord pays the insurance and the maintenance and repairs for the building.
  • Double net lease: The business owner pays the utilities, taxes and insurance premiums. The landlord is responsible for the maintenance and repairs.
  • Triple net lease: The landlord may pay for structural repairs, but the business owner pays for everything else.
  • Modified net lease: The business owner pays a base rent, and this typically includes some structural repair costs, taxes, utilities, insurance and building maintenance, as well as shared areas such as parking lots, sidewalks and stairwells. Modified net leases are most often used for multi-tenant buildings.

When a residential landlord presents a lease, the tenant does not usually have much if any say in the terms. However, a business owner and commercial property landlord may negotiate extensively before signing the commercial lease.

According to Retail Insider, a business owner should take the following steps before agreeing to sign a commercial lease:

  • Measure the space to make sure it matches what is on the lease agreement
  • Talk to other commercial tenants about what they pay and what incentives the landlord offered them
  • Negotiate the deposit
  • Make a counter-offer
  • Be prepared to walk away

No matter how perfect a location may seem, if the lease agreement is not favorable, it is not the right place to open for business.