Dangers of a lease

More Lease Option Risks Many people look to rent a home or an apartment instead of purchasing a home due to financial hardship. Renting is an excellent alternative for anyone not able to afford a home and needs to get their lives settled before taking the leap to home ownership once again.

Dangers of a lease

Startup Law Resources Business Operations A commercial lease for office or retail space is a serious commitment for your business.

Companies make mistakes all the time with these 7 as the most common.

Dangers of a lease

They are typically long-term contracts lasting at least five years, the rent is often your second-biggest monthly expense after payroll, and the rights and limitations in your lease agreement have major effects on your ability to expand, contract and relocate your business.

Companies large and small can make major mistakes when planning for new space and negotiating the lease - these are the most common. Not Allocating Enough Time Conventional wisdom in the commercial real estate industry is to allow six to 12 months to complete a deal for less than 10, square feet and nine to 18 months for larger deals.

The lead time is required for the various complicated steps in any business relocation - due diligence of possible locations, negotiation of the lease, planning and design of Dangers of a lease new space with an architect and engineer, bidding out and awarding the construction work required to customize the space known as a "fit-out"obtaining construction and business permitsand completion of the fit-out itself.

Just as important, the lease commencement date needs to take these steps into account. Insufficient Planning Closely related to the lead time issue is the failure to adequately plan your new space.

You need to think about how much space you need and whether you need any specialized space reinforced floors for heavy equipment? How will you coordinate moving all your business functions, particularly technology and your employees?

Who will make decisions about the ongoing project a committee or one person? What corporate image do you want to project, and what kind of office space will convey this image?

What ratio of collaborative office space vs. What is your budget? What space plan makes sense for possible growth? How much additional space might be needed in the next three to five years?

Or is there a possibility of downsizing? The financial terms and legal provisions of most commercial leases are specialized and hard to understand, and most business people lack the background to effectively review and negotiate a lease agreement.

In addition to reviewing the proposed lease, your real estate lawyer should also: Your architect should also confirm that the leased space actually contains the square footage stated by the landlord.

Not Understanding Crucial Lease Provisions Term This is the length of the lease - the commencement and termination dates. Like everything else in a commercial lease this not as straightforward as you think.

Does the term start when you sign it or only after you commence operations in the space i. How can the Term be extended - does it happen automatically or only after a party gives notice? Are there circumstances when you or the landlord can end the Term early?

Some of the common rent structures are: Single net lease or net lease: The tenant pays only its portion of the utilities and property tax calculated by the percentage of space leased in the buildingwhile the landlord pays for all maintenance, repairs and insurance. Net-net, or double net lease: The tenant is responsible only for its portion of the utilities, property taxes and insurance premiums for the building again, based on the percentage of space leased in the buildingwith the landlord paying all maintenance and repairs.

Tenant pays its portion of all costs of the building, except the landlord is generally responsible for structural repairs. Full service gross, or modified gross lease also called modified net lease: In addition, you need complete clarity on how and when rent can be increased - both on an annual basis and cumulatively over the entire Term.

It can be whatever amount the landlord thinks it needs based on the creditworthiness of your business. If you are a brand new business without an operating history this will be a big issue for the landlord. The landlord can also demand a security deposit in the form of a Letter of Credit issued by a bank.

Improvements and Alterations If the new space needs to be renovated or customized for your operations a "fit-out"the lease needs to specifically address these issues. It is also important to reach agreement on any rent payment obligations during the fit-out.

Parking and Signs Day-to-day details can also be important in the lease. Does renting space in the building entitle you to a certain number of parking spaces? Do you need to pay for additional spaces if you need them. Where can you install signs identifying your business? Do they need to be designed in a certain way?

Disputes If your business and the landlord get into a dispute, how will it be resolved? Is there a required period of negotiation?Otherwise known as a Lease-Option, a Lease-Purchase, or simply Lease-option, this is an agreement between a seller and a renter that gives the tenant the exclusive right of first refusal to buy the home and a predetermined price at a specific time.

For most people, leasing a car is a bad deal. Here are just some of the dangers of leasing a car that you need to be aware of the next time you go shopping.

Jan 14,  · Best Answer: This is actually pretty standard. After a lease is up, all the terms are still valid, except the contract is now on a month to month basis. If you want your tenant to sign a new lease to guarantee another period of time he or she will rent, you should offer some sort of bonus, like a 5% rent Status: Resolved.

Most Risks are Well Understood. The new lease accounting standards have been under development for over 10 years. As a result, the business risks from lease accounting are well understood by most of the institutional investors (think pension funds, mutual funds, insurers) that .

8 Hidden Dangers in Restaurant Leases provides an overview of some of the key lease provisions to be aware of. An experienced real estate agent or attorney specializing in restaurant leasing can guide you through this minefield and protect you from unexpected liabilities and expenses.

A commercial lease for office or retail space is a serious commitment for your business.

The lease helps to set expectations for the tenants and answers a lot of questions that may come up during the rental term. Some landlords may feel that they save time by not reviewing a lease with tenants before they move in. Risks of Subleasing There are some notable downsides to being a subtenant, among these: A subtenant’s occupancy rights “rise and fall” with the fortunes of its sublandlord (the prime tenant). 8 Hidden Dangers in Restaurant Leases provides an overview of some of the key lease provisions to be aware of. An experienced real estate agent or attorney specializing in restaurant leasing can guide you through this minefield and protect you from unexpected liabilities and expenses.

Companies make mistakes all the time with these 7 as the most common. 7 min read A commercial lease for office or retail space is a serious commitment for your business.

Lease Option Risks - Buyer Beware | CENTURY 21 Real Estate