Mistakes to Avoid When Negotiating a Commercial Lease Agreement in Nevada

If your business is looking for new office space in a business complex or a mall, you will find the search long and tiring. What you thought of as a prime location might not meet your needs as you’d expected or if there is a non-compete agreement in place, you will have to expand your search. While the first property you find is not always the best, there’s one thing you shouldn’t do: never sign a commercial lease agreement just because you are afraid of losing that space.

A commercial lease agreement represents a legally-binding agreement between you (the tenant) and the landlord or the property manager. Signing it shows that you agree to the terms of the contract and you will meet your obligations as outlined in the lease. The commercial lease agreement in Nevada also outlines the terms of the lease, whether it’s renewable or not, and how much you pay in rent and other expenses. It is also called a business lease agreement or a commercial real estate lease agreement.

Taking into account all the things that go into the lease and how much you have to pay for the commercial space, it is important that you understand all the terms of the lease well before you sign off on it. You shouldn’t leave any room for mistakes.

• Mistakes to avoid in a commercial lease contract include:

• • 1. Failing to Ask and Insist on Concessions on a Long-Term Lease

• Landlords like when you sign a long-term lease because they won’t be required to repair and remodel the space after every 2 years. It gives them income stability, and they will agree to a Nevada commercial lease agreement over 5 years fast even if a person looking for a 1-year lease pays more. But, that doesn’t mean that you should be happy with that deal as it is. Negotiate for concessions. One of the best and easily-granted offers is that of free rent or reduced rent for the first few months. Since you won’t have customers running into your business the first day it starts, negotiating for free rent is the best things you can do for your business.

• • 2. Being Panicky When Negotiating The Lease

• Never negotiate when you are panicky. Landlords can smell fear miles away. So, even if yours is a time-sensitive business, maybe you need a new space real soon because your lease for the other space is almost expired, or perhaps your business’ growth has been faster than anticipated and now you need a new space: you should take the time to breathe and think about the new business lease agreement. Keep an open mind and come up with creative options. Speak to your mentors and advisors for help and advice.

• • 3. Not Asking for Reasonable out Clauses in The Lease

• What are the terms of the lease on subleasing? Even when you are certain that a 5-year lease is what you need, things change along the way. You need to have a simple option such as the option to sublease, the option to sell the business, and the option to assign. To make this possible, ensure that the lease has simple clauses such as the ones indicating that the landlord may not unreasonably withhold these rights and options.

  If you are unsure of the out-clauses, your next best option will be to sign a short-term lease. Doing this ensures that you are not kicked out of the premises too soon. Other out-clauses include the ones dealing with defaulting, personal guarantees, or bankruptcy. Since these clauses are complicated, and one wrong word could result in an irreparable financial loss, we recommend speaking to a professional.

• • 4. Failing to Understand The Type of Lease You are Signing

• Are you taking on a fixed term or a periodic lease? Do you have to pay for all or some of the operating expenses for the property? Will the landlord require a percentage of your gross income as part of the rent on top of the base rent? Is yours a net, gross, or a modified gross lease?

  A net lease involves paying the base rent in addition to some or all the operating expenses for the property (taxes, insurance, and common area maintenance/ CAM). Often, landlords prefer tenants paying all these expenses (triple net lease) rather than one (single net lease) or two (double net lease) of the expenses.

  A gross lease involves paying the base rent, utilities, and the janitorial expenses with the landlord paying for the other expenses.

  A modified gross lease creates an arrangement where the operating expenses for the property are shared between the landlord and the tenant.

  You should never assume that you are signing a standard business lease. Find the most recent commercial lease agreement in Nevada that complies with the statutory changes made over the years. You cannot feign ignorance when taken to court.

• • 5. Taking the Landlord’s Word on Zoning

When looking for space, the zoning of the property will determine if you will be allowed to run that business at the location or not. To avoid issues with the city, first, ask for permission from the township or the city zoning officers before you sign that commercial real estate lease agreement.

Ready to sign a fair lease agreement without emotions clouding your judgment? Download our free commercial lease agreement forms today. The forms are accessible in Las Vegas, Henderson, Reno, Carson City, Las Vegas City, Carson City, Elko, and any other city in Nevada.