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What should I know before signing a commercial lease?

On Behalf of | Dec 29, 2016 | Commercial Real Estate

If you are considering signing a commercial lease in Houston, you know that making the right decision is imperative. To this end, you must take some time to consider certain key points before fully committing yourself to a commercial property, or you could run the risk of making a very costly mistake.  

The Balance.com recommends a few essential considerations you should make before signing a lease. Terminology used in commercial real estate leases is usually quite complex, especially if this is your first foray into renting property. CAM is a typical example, which refers to a common area maintenance clause. Understanding CAM is crucial, as you could wind up paying a lot more than you are actually obligated. You can request a stop lease for CAM clauses (which is calculated by determining the percentage of space within in a building that you are renting), and this will limit the fees you are required to pay.

You should also be aware of your landlord’s conditions regarding a personal guarantee. You can negotiate your guarantee so that it does not run the full length of your lease (which is important in case you need to terminate before the lease is up). While you will most likely have to provide a personal guarantee, you might be able to alter the terms so that it applies to only a percentage of the total lease term.

Most importantly, you should make sure you have read and comprehend the entirety of the lease before signing. Although it seems like common-sense, many people fail to go over their commercial leases in detail, especially when it comes to items that seem cut and dry. Check and double check dates and monetary amounts, as well as your specific obligations regarding clauses. 


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