Things to Consider Before You Sign a Commercial Lease Agreement in New Hampshire

It is said that the devil is in the details. In this case, we are referring to the details in your commercial lease agreement fine print. It doesn’t matter if you are in a rush to seal the deal before someone else grabs the prime office or business location for themselves.

If you are going to sign a lease agreement, you should read through every little detail and identify what is and what isn’t in the contract. Without taking a keen interest into what the lease is all about, and whether or not the terms of the lease are unfair, you will end up with an unfair and expensive lease that leaves you at the mercy of the landlord, one that results in unprecedented loss because of high expenses, or a lease that leaves your business exposed and vulnerable should a fire breakout or if the building gets demolished. A landlord may easily ask you to sign a lease that makes them free of obligations, even when the space they are leasing out is out of order.

To avoid falling into the hands of a conniving landlord, here are some of the things you should be aware of before you sign that New Hampshire commercial lease agreement:

The Permitted Use of the Property

How many times have you read about entrepreneurs taking landlords or property managers to court over providing false information regarding the zoning or the property and its permitted uses? You don’t want to be one of the people that add to the statistics. And since you don’t want to have issues with the town or city officers, you should confirm the property’s zoning, and whether or not the town council will permit you to run your business in that area. Don’t sign a lease or make any payment if you are unsure of the zoning structure.

At the same time, it is wise for you to confirm that the free location in that property will help your business grow. Are there non-compete agreements signed? Can you trust the landlord not to use up the parking space you need for your business to set up a structure?

Terms of The Lease

Every commercial lease agreement in New Hampshire has a term lease. Depending on your business, the lease could be short-term or long-term. However, these two are not the only terms applicable to commercial real estate lease agreements. There are fixed-term and periodic leases.

The fixed term leases are, as the name implied fixed. The start and end date of the lease are predetermined. During the term of the lease, the landlord may not increase the rent or change the terms of the lease, unless this provision is expressly given in the business lease agreement. With a fixed end date, neither party has to issue a notice to terminate the tenancy.

On the other hand, there are periodic leases. These leases lack a definite end date, and their terms can change as long as the landlord issues a notice to make the change. And, either party can terminate the lease at any time, but after they issue a notice to terminate the lease.

Rent Payment for Leased Commercial Property

How would you feel if after being on property for months your neighbors make you realize that you are paying a lot more in rent than they do? Perhaps you are catering for expenses they are not.

You may prevent that from happening by signing a lease only after you are certain that the type of lease you are opting for is fair. In this case, let’s introduce you to the four main types of leases that determine how much rent you will be paying.

Gross leases: this is a lease that allows a tenant to pay a fixed amount in rent. The amount payable is the base rent and the cost of utilities and janitorial services.

Net lease: when you choose a net lease, it means that you will be responsible for the base rent, as well as the cost of some or all the operating expenses for the property. These expenses include property taxes, property insurance, and common area maintenance (CAM). When you have to pay for these pro rata expenses on top of the base rent, utilities, and the janitorial services. In other words, yours will be a triple-net lease; the most expensive lease.

But, having to pay one or two of the operating expenses (taxes and/or insurance) means you are choosing the single or the double net lease.

Modified Gross Lease: if after negotiating with the landlord you end up shouldering the cost of the operating expenses, then that is a modified gross lease.

Percentage lease: in this arrangement, you have to pay the base rent as well as a specific percentage of your annual gross income.

Tenant Improvement

Do not sign a lease before you determine if the landlord pays for the improvement of the space or not. In most cases, the landlord will give their tenants a tenant improvement allowance for property improvement. If this is unavailable and the space requires a lot of work, you might have to pay more out-of-pocket resulting in high expenses you may never recoup.

• What Else Should You Consider Before Signing the Lease in New Hampshire?

• • Before you sign that business lease agreement, ask:

  • Who will be responsible for property improvement for ADA compliance/

  • If the tenancy is renewable or not.

  • What will happen if there is a fire or when the landlord needs to relocate you

  • If a similar business will be permitted to operate next door?

  • How much parking you get

  • The security deposit payable and procedure for return

So, there you have it: everything you need to know to protect your business interests.

Are you preparing to sign a commercial real estate lease agreement in Manchester, Portsmouth, Concord, Nashua, Conway, Keene, Derry or any other city in New Hampshire? Perhaps you should download our free commercial lease agreement forms accessible online across the state.