Mistakes to Avoid When Signing the Commercial Lease Agreement in Ohio

A commercial lease agreement is a legally binding agreement that recognizes the transfer of the rights to use commercial property or space for business in exchange for rent. This agreement is drawn between a lessor (landlord) and a lessee (tenant). Being legally binding, it may be presented in court as evidence should you default payments or do anything else that contravenes the agreement. The only way for you to avoid that possibility is by reading and reviewing the fine print to make sure that what you do is acceptable. This is especially important if you are starting a business for the first time and if you’ve not signed a commercial lease before.

• Before we look at the mistakes you should not commit, note that the document you will be signing is also called a business lease agreement or a commercial property lease agreement.

• • 1. Failing to Evaluate the Needs of Your Business

Don’t ever be in a rush to sign a lease just because another will take that commercial space if you don’t sign the lease fast. Only sign the Ohio commercial lease agreement because the commercial property meets your needs and because it will encourage the growth of your business.

When determining whether your needs will be met or not with a long-term or a short-term lease, take into account the zoning of the commercial property, corporate image in relation to the location, the layout of the space, and your budget: can you really afford the space along with the renovation costs and other building expenses?

In terms of the company’s future growth, will the lease for the space allow your business to grow without any interruptions? And finally, is the location technologically ready to meet all your unique needs?

Without thinking about all these factors that will affect the growth of your business, you will easily end up with an unfavorable lease that takes you back to the negotiation table in a few years.

• Note: if you are unsure about the market rates and where to find the commercial space that will meet all your needs effortlessly, hire an experienced broker.

• • 2. Rushing Through The Process

Other than confirming the suitability of the lease and the property on lease for your business, most people rush through the sections of the lease. You should always take time to understand what every section and clause in the agreement means. Some of the most important sections of the commercial lease agreement in Ohio include the lease term, rent and associated expenses, security deposit, parking, and tenant improvement, among others.

Lease Term

Looking beyond one or two years is important. With your business needs in mind, you could either sign a fixed term or a periodic lease.

With the fixed term lease, you know that you will only use the commercial space up to a specific date. During the length of the lease, the landlord may not raise the amount of rent charged or change the terms of the lease. The only exception to this is if is a provision in the lease allowing such change.

On the other hand, there is the periodic lease which has no definite end date. It is renewable, and either party can terminate the lease as long as a lease termination notice is issued within the acceptable time limits. Also, the terms of the lease may change, but it should be provided for in the initial agreement.

Types of Leases in Ohio

Leases also determine how much rent you pay. In Ohio, commercial leases may be created in three main ways:

Gross Lease: this is where the tenant is only responsible for the monthly base rent only. The landlord covers all the other expenses and management fees associated with the lease.

Triple Net Lease: if you agree on this type of lease, know that you will have to pay the monthly base rent, as well as all the expenses, taxes, insurance, and fees associated with the property.

Modified Gross Lease: this a hybrid of the two leases above. With it, the tenant pays the base rent as well as a portion of the expenses.

Security Deposit

• Confirm if and when you will receive your security deposit when the tenancy terminates.

• • 3. Basing Your Decisions on The Price

• The price you pay for that prime property is important, but it isn’t everything you should think about. The location, commuter patterns, accessibility, presence of amenities, safety, space layout, image, parking, and the presence of a human resource pool to hire from are crucial elements to determine the suitability of that space.

• • 4. Overlooking Extra Costs

Don’t forget to factor in the cost of furniture, IT and communication expenses, HVAC costs, moving costs, and other moving expenses.

Other costs that will affect leasing of the commercial property include fittings and fixtures, improvement for ADA compliance, and the escalation costs.

• Don’t forget to review the terms associated with subleasing and assignment of property.

• • 5. Failing to Ask for Incentives From The Landlord

Have you considered asking for a free rent period, tenant improvement allowance, tenant improvement allowance, or the leftover tenant improvement allowance?

Are you ready to prepare a commercial property lease agreement in Columbus, Cincinnati, Dayton, Cleveland, Akron, Toledo, Kent, Zanesville, or any other city in Ohio? Get started with our free commercial lease agreement forms today.