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Everything You Need to Know About the Commercial Lease Agreement in Virginia
A business’s growth relies on how well its owners or managers control the expenses and what they do with the profits. While paying employees takes a huge chunk of money from the company’s coffers, the cost of rent may be higher. What this means is that most entrepreneurs will opt to lease property but only after they negotiate the best deal. If you are wondering if you can score an excellent deal that won’t drive your business expenses off the roof, here is something you should do: negotiate the best Virginia commercial lease agreement deal and don’t settle for the first property you see. Also, use your current, and future business needs to determine which lease will work well for the business. By business needs, we mean evaluating the location of the potential business space, accessibility, level of development and infrastructure, size of the space, and the presence of human traffic and human resources. Once you are certain that the location you have in mind is exactly what your business needs, then you can look at leases and review the leases.
Keep in mind that the commercial lease agreement in Virginia is a legally binding contract and breaking it for any reason will cost you a lot of money. So, negotiate first. Remember that every element in the lease is negotiable, landlords need you more than you need them, and you have the right to negotiate for concessions.
Some of the things you should know about the business lease agreements include:
The specifics of the commercial space
The lease should have the size details of the leased property, as well as the details of other specific features and amenities present. You also need to confirm that the landlord will permit you to run that kind of business in that location.
Check if there is an exclusivity clause. With an exclusivity clause, the landlord gives you the right to run your unique business in that location without worrying about a competitor setting up shop next door.
The term of the lease
The length of your lease is not just about how easily you can run your business for the next decade in that location but also an element that determines whether or not you get concessions from the landlord. With a short-term lease, negotiating concessions like free rent period or a tenant improvement allowance is a long shot. But, a long-term lease gives you leverage. The landlord will easily grant you a free rent period as you pull in customers. Also, they will be willing to give you an allowance on the improvement of the space.
However, you shouldn’t decide on the length of the lease by looking at the perks that may come your way only. You need to check your business needs too and the size of your business. A startup is riddled by uncertainties, and a long-term lease may be inappropriate. If this is the case, you should consider negotiating a long-term lease with the option for lease renewal.
Types of leases in Virginia
Leases come in different formats depending on their intended uses, as well as the rent payable by the tenant.
Gross lease: this lease lets you pay the base rent only. The landlord caters to other costs.
Net lease: the focus for net leases is the triple net lease because it is the most common lease. In this arrangement, the tenant pays the base rent as well as the cost of property taxes, property insurance, CAM (common area maintenance), utilities, and janitorial services.
Modified Gross Lease: here, the tenant pays the base rent as well as a portion of the property expenses.
Percentage lease: in this arrangement, you’ll have to pay the base rent in addition to a percentage of your gross profits.
Note that the commercial lease in Virginia does not obligate the landlord to maintain a tenant’s premises; unless it’s expressly stated in the lease agreement. The landlord is, however, responsible for main structural repairs for the building.
The landlord sets the security deposit clause, but it is negotiable. You should know that there are no laws that govern the size of the security deposit asked. However, the lease should have the procedures for refunding the security deposit.
The landlord and the tenant are required by the Americans with Disabilities Act to make their business premises accessible to persons with disabilities, both internally and externally. If the premise you are interested in is non-compliant, you should consider including in the lease the terms that make the landlord responsible for the necessary improvements. Don’t forget to do your part in making the internal floors safe and accessible.
Subleases and Assignment
If you are taking on a long-term lease, confirm whether you can sublease the property and assign the lease, rights, and obligations to a third party, or not.
Other things to consider:
Right to mitigate
Termination and relocation rights
Interested in commercial leases in Norfolk, Richmond, Virginia Beach, Roanoke, Alexandria, Arlington, or any other city in Virginia? Download our free commercial lease agreement forms to get started.