Check Before You Sign a Commercial Lease!
Know What You Are Signing...Before You Sign!
BEFORE signing a commercial lease, there are many things you should check and ask questions about. Many things in a lease are negotiable between the landlord and the tenant, so before signing, check each of the items below and ask the landlord about any items you are unsure of or do not wish to agree to. Doing this will save you many potential headaches in the future! Important parts to review include:
Financial Considerations
• Rent and increases: Understand the base rent, the total cost per square foot, how/when rent will increase, and the breakdown of CAM (Common Area Maintenance) and RET (Real Estate Taxes).
• Security deposit: Know the amount required, how it must be paid, and the conditions for its return/refund.
• Additional costs: Clarify who is responsible for utilities (water, electricity, gas, trash) and all interior/exterior building maintenance and operating costs.
• Tenant improvement allowance: Determine whether the landlord will provide a budget or credit for improvements the tenant makes to the exterior or interior of the property.
• Late fees and grace periods: Confirm how late fees are calculated and whether a grace period applies.
• Audit rights: Check if you have the right to review CAM/RET charges to ensure accuracy.
Legal and Operational Terms
• Lease term and renewal: Ensure the lease length aligns with your business goals and understand renewal/expansion options. Whenever possible, list the exact physical start and end dates.
• Permitted use: Confirm zoning allows your specific business activities and whether competitors are permitted in the development.
• Insurance requirements: Confirm all required insurance types (liability, property, worker’s comp) and whether you must insure improvements.
• Termination clauses: Understand conditions, notice periods, and fees for early lease termination.
• Subletting rights: Verify whether you can sublease or assign the lease if needed.
• Hold-harmless and indemnification clauses: Review whether the lease shifts excessive liability to you.
• Exclusive use clauses: Ask if you can add an exclusivity clause to prevent a direct competitor from leasing nearby.
Property and Condition
• Lease commencement date: Confirm the move-in date and how it ties to rent commencement - move-in date could be different than when rent begins.
• Premises description: Ensure the lease clearly describes the exact space, suite number, and boundaries.
• Square footage verification: Verify that the stated square footage matches the actual usable space that you are renting.
• Building condition and maintenance: Review the condition of HVAC, electrical, plumbing, flooring, roof, and structural components. Clearly define who pays for repairs and replacements should any of these systems fail.
• Improvements and build-out responsibilities: Confirm who pays for permits, build-out work, inspections, and Code compliance for any building improvements.
•Signage: Confirm what signage is allowed per Village Code, who pays for installation, and any design restrictions.
Operational & Business Considerations
• Parking: Verify how many parking spaces your business can use and rules for customer vs. employee parking.
• Hours of operation: Confirm whether the property restricts the hours your business can be open.
• Noise, odor, and waste restrictions: Important for restaurants, salons, gyms, and retailers - find out if any of these restrictions pertain to your business.
Professional Review
• Hire an attorney: It is crucial to have a qualified attorney review all terms, identify hidden risks, and protect your interests before signing any lease.
• Consult with your local Economic Development office: They can provide zoning verification, process guidance, and local permit requirements. Call Hanover Park Community & Economic Development at 630-823-5780
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