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Things to Consider Before Signing a Commercial Lease Agreement in Idaho
If your business’ growth is looking up, getting a bigger space or opening up new branches in prime locations should be part of your expansion plans. To achieve that, you have to look for the right location, apply to lease the property that best fits your business needs, then you will sign a lease agreement before you move in. As much as the last bit sounds easy, it is a significantly weighty issue. By the time you put pen to paper, you should have evaluated the terms of the agreement to identify whether or not the terms of the lease meet your business needs.
A commercial lease agreement in Idaho is a legally binding contract that creates a relationship between a lessor (landlord) and a lessee (tenant). It also transfers the rights to own commercial property for a specific duration, and at a specific amount.
The lease contract stipulates the terms and conditions for running a business in the commercial space. With the terms, the lessor’s paid their share on time and their property protected while ensuring that the lessee meets their end of the bargain, doing all they can to maintain the property.
Unfortunately, the terms of the Idaho commercial lease agreement or that office lease agreement are complex. The sections are different depending on the state you live in and also the location of the commercial space. Understanding what all the sections entail will break off disputes, ensuring that you bag a lease with favorable terms.
To get that favorable commercial real estate lease agreement, you need to consider several factors discussed below.
1. Type of the leases
A lease agreement template might not have all the details that should be in a lease, and it might not explain all the elements of the lease. So, don’t assume the generic terms of that lease. The main types of leases you should be aware of include:
Gross or full-service lease – with this lease, the rent charged is inclusive of standard operating expenses for properties including taxes, utilities, and the maintenance costs. The rent charged is fixed and predictable.
Modified Gross Lease – with this lease, the tenant pays the base rent which might include some of the operating costs. The operational costs are shared between the landlord and the tenant.
Net lease – A net lease involves payment of the base rent and a portion or all the operating costs of the property. The net lease can be single, double or triple net lease. In the single lease, the tenant pays base rent and the cost of utilities, as well as property taxes. The double lease involves payment of the base rent, property insurance, property taxes, and the utilities. The triple net lease (NNN), on the other hand, creates a situation where the tenant pays the base rent plus the property taxes, insurance, and the common area maintenance (CAM) costs.
Percentage lease – with this lease, the tenant agrees to pay a percentage of their gross income on top of the base rent.
Fixed term lease – as the name suggests, the end date of a fixed-term lease is predetermined. The fixed-term lease may be one of two types: the fixed end-date lease or the fixed monthly, weekly, or yearly lease. While both leases have predetermined end dates, the former’s end date is exact with the latter being a little unspecified. In both cases, however, the landlord accepts rental payments if the tenant fails to move out at the end of the lease, but the tenant has to sign a new lease to continue using the lease, or they get evicted.
Periodic lease – this lease is also called an automatic renewal lease. At the end of the agreed period: week, month or year, the lease is renewed under the terms agreed upon initially. The landlord may change the terms of the agreement or increase the rent before the lease is renewed automatically by issuing a written notice as per the statutes.
2. Reasonableness of the term
Do the terms of the lease suit your business needs? Does the lease come with the option to renew? 1 or 2-year leases are common with small businesses, but there should be wiggle room in the lease because of the uncertainty associated with new businesses.
Favorable terms, unsuitable location – sound familiar? To avoid that from happening, research widely. Check accessibility, the interior design and exterior décor, and proximity to competitors. You also want to check if there is an exclusivity clause preventing landlords from leasing other spaces in the property to your competitors.
4. Maintenance and upkeep
Commercial leases place the responsibility for maintenance costs on the tenants. But, some costs may be covered by the landlord. The lease should define those terms. Also worth confirming is whether or not you can sublease the property or transfer it.
Elements of a complete lease agreement form:
Names and addresses of the lessor and the lessee
The specifications of the commercial space
The rent amount, terms, type of lease
Miscellaneous terms like those covering signage and parking.
Signatures of the parties
Are you ready to prepare a business lease agreement? Get started with our free commercial lease agreement forms downloadable easily, and accessible from Boise, Twin Falls, Idaho Falls, Tampa, Meridian, Pocatello, or any other city in Idaho.