Moving from any commercial property can be a daunting prospect and any business who has gone through it will appreciate that it can be a complicated journey with many potential pitfalls along the way. Even more so for those not familiar with the process and having to deal with leasing language and all other legalities involved.
To help make your move run as smoothly as possible Jonathan Pickles has brought you his Ten Commandments to read through and tick off as you go and you’ll be surprised just how quickly everything comes together.
- ENSURE YOU KNOW HOW YOUR RENT IS TO BE COLLECTED.
Once you’re ready to move into your new premises and you glance over the agreement, make sure that you take extra notice of exactly how to pay your rent. Rent payments are often quoted as a rate per month or price per square foot annually (divided into twelve monthly payments or quarterly payments). However there are occasions when a landlord will ask for a percentage of your location sales, this will happen more often in retail or restaurant businesses. So don’t be caught out and make sure you know which terms apply to you.
- COMMON AREA MAINTENANCE CHARGES TO WATCH OUT FOR.
Maintenance charges can be a service charge for maintaining the common areas often found in an office building or a retail location. This amount would be in addition to your monthly rental payment and can change significantly from year to year so make sure you take into account the current charges and how they may fluctuate over the coming years.
- POTENTIAL RENT INCREASES.
Your landlord can incorporate a modest increase in your rent to account for inflation in the future but ensure you check the lease carefully to make sure that these rent increases are no more than a few percentage points, before you sign on the dotted line.
- ARE UTILITIES INCLUDED?
Some commercial property agreements include certain utilities although this is more often on smaller or older office rentals. Ensure that if it has been mentioned verbally that utilities are included in your agreement that you get it in writing within the lease before you sign.
- DO YOU NEED TO PROVIDE A PERSONAL GUARANTEE?
If you are a new company your landlord may ask for a personal guarantee. This protects the landlord and is often put in place in case a tenant defaults on the lease and then claims bankruptcy. If you have given a personal guarantee to the landlord don’t forget that he can come after the guarantor for the balance owed.
- DO YOU HAVE PROPERTY TAXES TO PAY FOR?
Some Landlords pay property taxes for commercial space and this can be relayed back to you and included within the service charge. If you find this within your agreement ask for full clarification so that you are clear on exactly what it is you are paying for.
- TRANSFER CLAUSES.
Some of the more flexible leases will allow you to sublet or transfer your lease if you decide to move your business. However the landlord may require your incoming replacement tenant to satisfy certain criteria before he allows you to move on. Consequently assigning your lease to a new tenant may not be straightforward and may hold up your relocation.
- LIMITATION OF USE.
Check that there aren’t any restrictions within your lease with regard to for example opening times, signage or restricted access at certain times. These limitations could hinder your business and become prohibitive to your future success.
- PRE-EXISTING CONDITION CLAUSES.
Before you set about changing your office (remove) building by creating walls, installing new fixtures and other physical aspects, check your lease for a pre-existing condition clause. Some landlords are now inserting these clauses in to the lease which require tenants to restore the accommodation to its original condition and appearance when they move out. This can be a very costly expense and can make the changes that you have initially planned too costly to rectify when you leave.
- TENANT REPAIRS
Before you sign your lease and move in to your new premises ensure you know who is responsible for the repair of central heating systems, lighting and leaking windows and so on. Many landlords will attempt to have tenants pay for the expenses even though the building may be old or have lacked previous maintenance. Seek to clarify the situation and have it written in to your lease so there is no ambiguity.