Leasing 101: Key Points for Tenants

December 17, 2020

Where you do business is as important as how you run your business. A good lease will provide you with certainty about costs.  It sets out how long you can operate in your current location. Understanding what you can and cannot do on leased premises is also central to how you will run your business now and in the future. Advanced planning such as negotiating a comprehensive lease can help you avoid the myriad leasing issues that could crop up to hinder your operations.

As a business owner, you are working hard to grow and expand your business. Did you know that most commercial leases limit what types of business a tenant can operate on the leased property? You should have a keen understanding of whether – and under what conditions – you can expand your business on the same premises. It may even make sense to include an option to purchase the premises or a preferential right to lease additional square footage in the same building to ensure you have the physical space to grow.

You will also want to know how the lease addresses unexpected or long-term issues such as who will pay for a leaky roof or broken HVAC system, who owns improvements after the tenant has moved out, and what happens to the lease if the building is damaged, or either party goes bankrupt or ceases operations.