Comprehensive Guide to A Commercial Lease Agreement in Nebraska
A Nebraska commercial lease agreement refers to a real estate contract. Once signed, it binds a tenant to a landlord and the property leased. The contract outlines the obligations of the tenant and the landlord. However, before you sign the lease, and even if you are worried about losing that prime office space, there are things you should know about the commercial lease agreement in Nebraska, what you should negotiate, and generally what will be expected of you.
Reviewing the lease to make sure that it has all the essential terms
Also called a commercial property lease agreement or a business lease agreement, a legally acceptable lease agreement in Nebraska is only deemed complete and valid if it has specific elemental terms in it. The basic elements of a lease agreement include the base or the minimum rent, term of the lease, the rent due date, expected future changes, as well as a detailed description of the property zoning and its permitted uses. It should also come with a termination clause, relocation clause and details on what happens to the lease if you terminate early.
During the review, you should confirm that everything your landlord says about the property is the truth. If there are modifications made or ones you’ll have to make, they should all be documented. You need to make sure that what you see is what you get. Failure to confirm these features leaves you in an uncomfortable space where you have to pay more than you bargained for. When you sign a lease, it means that you agree to the terms of the lease and that everything in it is in order. You don’t want to make an expensive mistake here.
Check the Additional Provisions
Leases are supposed to be comprehensive. So, you should expect to see clauses on extra rent charged, insurance requirements, operating hours, signage and subleasing. These are essential negotiable instruments
You should understand why they are charging more or extra rent, the terms for subleasing the space, and the regulations on opening hours.
Negotiating A Favorable Lease
The rent payable depends on the type of lease you choose. There are four main types of leases that determine how much rent you pay. They include:
Gross or Full Service lease – this is the most common lease. In this arrangement, it is determined that the tenant agrees to only pay the base rent, utility costs and the cost of janitorial services. All the other expenses are catered for by the landlord. This leaves a tenant with a fixed rental charge, only adjusted as per the terms of the lease.
Net Lease – in a net lease arrangement, a tenant pays one or all the property expenses, in addition to the base rent. The net lease can be a single net lease where a tenant pays the base rent plus property taxes; double net lease where the tenant pays the base rent, property taxes, and property insurance; or triple net lease where the tenant pays for all expenses related to the space (base rent, property taxes, insurance, CAM/ common area maintenance costs). In all these cases, the tenant is also responsible for janitorial services and utilities.
Modified Gross Lease – here, the tenant pays the base rent and a portion of the operating expenses. The landlord shoulders the rest.
Percentage Lease – this is an agreement drawn between the landlords and tenants in malls and other multiple-retail spaces. With this lease, it is agreed that the tenant pays the base rent and a percentage of their gross profits.
Terms of the lease
The duration of your lease depends on your business needs. A small business owner needs a short-term lease while an established business works well with a long-term lease.
Besides the length, the lease also varies depending on the end date of the lease. You’ll have to choose between fixed term and periodic leases.
With a fixed term lease, the end date or termination time for the lease is known, and unless provided for in the lease, its terms cannot be changed or rent increased. Also, since the termination date for the lease is known, there is no need for a termination notice.
On the other hand, you have the periodic lease. Its terms are fixed, but they can be changed when due notice is issued. To terminate the lease, either party has to issue a termination notice.
There is no specific figure to be given as the security deposit. But, understanding the legal provisions for this matters. In the state of Nebraska, for example, there are limitations placed on the parties. The landlord has to return the deposit within 14 days after the termination of the lease and after the tenant vacates the property.
Legally, landlords are allowed to increase rent for commercial properties by a small percentage to cover inflation costs. Now, you need to know the market going rates to protect your business. The escalation costs are calculated in different ways including by a specific amount per square feet, a specific percentage, and the value may also be indexed,
Other elements to review and negotiate include ADA compliance, lease renewal terms, relocation rights, and subleasing or assignment rights/ clauses.
By reviewing every aspect of your lease, you protect your business from unfavorable terms.
Ready to move your business as it expands? Get started with our easily downloadable and free commercial lease agreement from in Lincoln, Omaha, Grand Island, Monowi, Kearney, North Platte, or any other city in Nebraska.