What to Watch Out for in a Business Lease - dummies

What to Watch Out for in a Business Lease

Part of Business Contracts Kit For Dummies Cheat Sheet

If your business has a physical presence, you’ll most likely negotiate a business contract known as a lease for rental of space to house your business. Be aware that the landlord may use a form lease that contains gotchas. Gotchas are provisions that may cost you a lot of money or headaches in ways that you didn’t plan. Your best bet is to negotiate them out of the lease. Some classic gotchas to look out for include:

  • The landlord’s right to pass increased operating costs in the building on to the tenant without limitation

  • The tenant’s obligation to pay any increased taxes as a result of the landlord’s selling the building

  • The landlord’s right to terminate your lease early for his or her convenience

  • A disclaimer about the building and the services provided to tenants

  • Severe limitations or prohibitions on subletting your space (you may need to sublet space if your business shrinks)

  • Personal guarantees or payment of the rent required from the company’s owners