Flavia owns an apartment that she uses as a rental property. The new tenant signed a contract and simply called to withdraw from the lease. Flavia has the first month`s rent and a deposit. Should Flavia keep the money? Most leases are spectacularly unilateral to the owner`s advantage and many tenants will sign them with few modifications. This is not ill-intentioned on the part of the owner. They are simply protecting their interests, which is the responsibility of each party. The tenant needs an experienced commercial leasing professional to ensure that their interests are protected. Owners like to make concessions when they are requested, but not if they are not. It is in the retail trade that the rental contract is most often found as a percentage. The tenant pays a small basic rent plus a percentage of the monthly sales volume. Most percentage leases allow the tenant to build a certain amount of sale before they start paying the percentage. This type of agreement is used in industrial, office and retail buildings, and the terms of a modified net lease agreement can be as different as the types of buildings and tenants. These rental contracts can be flexible for both the tenant and the owner and protect the owner against the increase in taxes and insurance as the gross rental contract.
What is your experience with entrepreneurs who have negotiated their own commercial leases? A commercial lease is a much more complex contract than a sales contract, as it is a relationship – not an isolated event. Think of it this way: a rental agreement covers a period during which a number of events, planned or unforeseen, can occur. It is important that someone familiar with commercial leases ensures that the most common contingencies are covered before signing. Since commercial leases can have a big impact on a company`s profitability, we spoke with Robert McBride, Commercial Real Estate Endorsed Local Provider (ELP) and brokers in the Atlanta area. Here`s what Robert had to say about how to negotiate the right commercial lease for your business. The designing party usually wins the intricacies of a contract negotiation, but in the world of commercial leasing, the lessor`s lawyer almost always designs the lease. How does a landlord ensure that the lease meets their needs? Most landlords will agree if the tenant is an established business with a track record, credit, and proven assets. Start-ups will find it difficult to find a donor who is well aware of this agreement, especially if the lessor is expected to contribute to the improvement of space. Often, we can get the owner to accept a clause that releases the personal guarantee after a few years of good payment history. In the case of a gross rental agreement, the landlord pays taxes, insurance and maintenance costs.
Gross leases are the most used for office and industrial space and some retail real estate. A variant of the gross lease agreement is the full-service lease agreement, in which the owner also pays the costs of electricity, water, gas and concierge. Many gross leases contain a provision that tenants pay their share of this increase when tax and insurance costs increase, usually in an annual flat rate. Tenants have the right to expect a landlord to immediately carry out the necessary repairs and pay taxes and insurance for a property. As a landlord, you have the right to expect rent to be paid prematurely or on time and the tenant to abides by the property and the guidelines of the rental agreement. A lessor also has the right to distribute a tenant if he violates the terms of the contract. Owners find the best protection in a triple net lease or NNN leasing. In the case of a triple net lease, tenants are responsible for all taxes, insurance and maintenance, even if this means, for example, that the roof needs to be replaced. Tenants can accept an NNN lease if the building is newer – there is less risk of maintenance issues and they usually pay a lower base rent….