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3 elements that set commercial leases apart from residential ones

On Behalf of | Aug 13, 2021 | Business Law

If you recently officially formed your business or are finally ready to take your home run company and turn it into a successful commercial venture, you probably need a space to do business. Regardless of how confident you are about the likely success of the company, you probably don’t want to immediately purchase a commercial facility. 

Your ideas about your business needs will likely change in the first few months of operation. That can make a lease a more accessible way to obtain a location for your company. 

Even if you have signed a residential lease before, a commercial lease is very different. You need to know about the following three differences to make an informed rental decision.

1. Commercial leases last longer

Residential leases will usually only last for 12 months. Sometimes they are month-to-month leases. With a commercial lease, you can anticipate an obligation to continue paying rent for between three and five years after you sign.

2. Commercial lease has often come with secondary expenses

There are multiple different lease structures that commercial landlords can use. Generally, you can expect they will pass along most building maintenance expenses to your company as the tenant. If there are multiple tenants, you will all split those charges. Everything from security costs to parking lot maintenance will likely be something you have to pay for in addition to your rent.

3. Commercial leases often make tenants responsible for maintenance

Many commercial leases have terms that require the tenant to absorb the costs if the boiler stops working or the roof starts leaking. Especially if you rent the entire facility and not just a single unit in the larger space, the chances are good that you will have maintenance responsibilities and cannot expect your landlord to make repairs on your behalf. 

Learning about commercial leases and evaluating the terms offered in a lease before you sign can help you protect your financial solvency when starting a business.