Things to Consider Before Signing a Commercial Lease Agreement in Wyoming
If you are looking for new office space or commercial space for industrial or commercial use, you’ll have to deal with a commercial lease. If this is your first encounter with a commercial lease, you may make up some mistakes, and the unfortunate bit is that once you sign the lease and after it’s notarized, you will pay a huge price for your mistakes. The only way for you to avoid those mistakes is by going through that Wyoming commercial lease agreement, even with a lawyer, review all the terms of the lease and negotiate favorable terms.
There’s the fact that a commercial lease is not subjected to as much government protection as the residential lease, hence the need for a higher level of vigilance.
Below are the areas and aspects of the lease you should pay closer attention to:
This refers to the length of your lease from the lease commencement date, and it also highlights whether or not the property comes with a renewable lease or not.
As an important element of the commercial lease in Wyoming, you need to make sure that the terms you agree upon are favorable for your business. In most cases, landlords are willing to negotiate lease terms for the long-term leases rather than the short-term leases. The problem with the long-term lease is that it limits your company’s flexibility and its ability to adapt to future changes. Also, if the market rates drop, you may be forced to pay more for the space because that is what the lease demands.
If you have these fears, you may want to negotiate a short-term lease with the option to renew.
You should examine the exact space included in the commercial rental agreement. This might not sound like a lot at the moment but, you need to examine and discuss the hallway and restroom use, as well as the use of elevators, entrances, and other common areas. You also need to check how the landlord is quoting your rental charge: is it per the usable square footage or the rentable square footage? The usable area is less than the rentable area because it’s exclusive of the common areas like the lobbies, bathrooms, hallways, and elevators. Determining the rent pricing cost will help you determine whether the rates are fair or not and if you can negotiate.
Rent is the biggest business expense, and you don’t want your business to run down and closing its doors too soon. Before signing a commercial lease, evaluate the terms of the lease with regards to escalations and rent increases. This is because getting a fixed-rent lease is not easy. When evaluating the terms for the escalations and rent increase, you should find out the method used by the landlord to calculate escalations and find out if the rate can be capped. The easiest way to negotiate a market cap on the escalation rate is when the landlord uses the Consumer Price Index.
Items included in rent calculations
Before signing the lease, evaluate the terms of the lease on rent and the other expenses you may have to cater for. In most cases, you’ll have to negotiate the property taxes, maintenance fees, and property insurance, and in other cases, you may have to shoulder these costs. If the terms are unclear, you should ask the landlord about them and their expectations.
Subleases and assignment
Can you transfer the terms of your lease to a third party and assign them the rights you had as the tenant? Whether the landlord allows this or not is important, and you should pay close attention to it. Negotiate this clause keeping in mind that landlords may permit subleases or assignment of leases if they receive adequate notice of the arrangement and if they have an opportunity to vet and approve the new tenant.
Compliance with the laws
That commercial space should comply with the state, federal, and local laws and the building should have all the necessary approval documents. The other important law to comply with the is the Americans with Disabilities Act which requires businesses open to the public or the ones that employ at least 15 people to have safe and accessible premises for people with disabilities. This means that landlords and tenants should ensure that the premises they run their businesses on are compliant. In the lease, the party responsible for renovations to improve the property should be named.
The lease should have a dispute resolution clause, and you should only sign off on it if the recommended methods of dispute resolution are agreeable. Since litigation is expensive, most leases allow for arbitration and mediation for dispute resolution.
What else should you check?
Improvements and modifications: must the landlord approve the improvements? Should you leave the space in its original condition at the end of the lease term? Will you get an improvement allowance because most landlords own improvements made to a space at the end of the lease?
Signage sizes, lighting, location, and appearance
Security deposit – costs to be deducted from the security deposit should be clarified.
Also, discuss your termination and relocation rights.
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