Recognize these red flags before signing a commercial lease

On Behalf of | Nov 24, 2021 | Commercial Real Estate Leases | 0 comments

Signing a Florida commercial lease involves a high degree of commitment because commercial leases tend to last longer than residential ones. Because you may find yourself wrapped into a commercial lease for the next several years, it is important that you take the time to read through lease terms thoroughly before agreeing to rent a particular space.

According to CBI Commercial, there are certain things you may want to look out for when reviewing a commercial lease agreement. If you see one or more of the following on the lease, you may want to think twice before signing it.

Tax escalation provisions

It is common for commercial leases to include language about paying additional rent in the future based on changing tax rates. However, you may want to review the provision carefully to make sure you are not paying an increase that is disproportionate to the amount of space you occupy.

Overly lengthy renewal clauses

As long as you pay on time, it is often in your landlord’s interest to keep you in a particular commercial space, rather than have to find a new tenant. For this reason, you may find that your commercial lease has a lengthy renewal clause dictating that you must renew it for a certain span. If the least lasts more than two years, or if the renewal clause mandates that you renew for at least two years, consider these inclusions red flags.

Commercial leases often contain complex legalese that you may not fully understand unless you have considerable experience reviewing such leases. Thus, it may serve you well to have someone else review a potential commercial lease before you agree to its terms.