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Before you lease a building for your company

On Behalf of | Aug 29, 2019 | Firm News

It is time to move your successful Pennsylvania business from its start-up location in your home to a commercial building. At Laputka, Bayless, Ecker & Cohn, PC, we often provide counsel to business owners who want to negotiate the best lease agreement for their company.

There are four basic types of commercial lease, as Forbes explains:

  • Net lease: You pay your own utility bills and the property tax. Your landlord pays for the insurance, and the building maintenance and repair costs.
  • Double net lease: You pay for the building’s insurance premiums as well as the utilities and taxes. Your landlord still pays for the building maintenance and repairs.
  • Triple net lease: Your landlord will probably agree to be responsible for any structural repairs the building needs, but you pay all the other costs.
  • Modified net lease: You pay a base rent, which includes some of the costs of the structural repairs, taxes, insurance, utilities and maintenance of the building and shared areas (such as stairwells and parking lots).

If the building has more than one tenant, the landlord will probably offer you a modified net lease.

Watch for terms that allow the landlord to increase your rent, such as an escalation clause. Also, be sure to note who is liable for damages to the property in a variety of situations. Keep in mind that unlike a residential lease, a commercial lease is open for negotiation. If the terms are not right, it is likely in your best interest to walk away, even if the location seems ideal for your business.

More information about business contracts is available on our webpage.