Commercial Building Lease – Learn 7 Helpful Tips Before Signing A Building Lease Agreement

Commercial Building Lease

Potential Pitfall In Signing A Commercial Building Lease

Once you sign on the line, the building is yours for the term of the lease. You need to be absolutely certain that the property can be used for your intended purpose. Some communities will require that you get a zoning compliance permit before you start business, while others will only react to a complaint. A request for a building permit to remodel the building will often cause authorities to look at your zoning. The best thing to do in working out a lease, is to make the lease contingent on your ability to get any required zoning approvals or variances.

Dealing With Building Codes


Commercial building codes are constantly being changed and new requirements implemented. Typically, the changes are not retroactive and the current use by the current owner is provided with an exception. That exception may not cover you as the purchaser of the business or the property, especially if you plan to do any renovations. It is critical that you do your homework and know the code before completing your cost analysis. And, by the way, it is even more critical to complete your cost analysis before obligating your business to purchase or lease the property.

Know Your Licensing Requirements

Businesses are required to be licensed.  Sometimes multiple licenses are required. The requirements may be Federal, State or local. There are almost always requirements at the local level. In addition to business licenses, there may be special professional licenses or there may be building code requirements. To know your requirement, you should check directly with the local government agencies. Relying on what other businesses have done or what a broker tells you is a recipe for trouble. The responsibility – and the penalty – will be yours.

Don’t Sign Until You Know The Zoning

What could be more costly than moving into your newly leased office space only to find that your business cannot be located there because of zoning ordinances. Make your lease contingent on getting the right zoning. Have your attorney look into the laws. Points to consider include off-street parking, placement of signage, approvals required to modify the structure, special rules affecting your type of business, etc.

Health And Environmental Permits

Environmental issues, such as air and water quality are often supervised at the state or regional level. Local health departments will most typically come into play with businesses that sell or prepare food. These business will need a license or permit from the local health department. It is possible, however, that the health department will become involved in other businesses. Examples include businesses that use well water or septic tank systems. Check with your local attorney to determine your requirements.

Know The Fine Print

Does your landlord have the right to move you to another suite? Do you need the landlord’s approval to make improvements to your space? Can the landlord pass through the cost of ADA compliance as a CAM charge? These and other questions point up the necessity to read the fine print in any legal document. And tough documents need the trained eye of an attorney.

Getting Out Of A Lease

There are two options that an entrepreneur can use to shed the lease obligations of a failing business:

1. Buy out the remaining obligation – offer the landlord a quick lump sum in exchange for a quick and orderly exit. You may get by with losing your security deposit and a month’s rent. In tough markets, you may have to offer more.

2. Find a new tenant – With a long-term lease, your best bet may be looking for a replacement tenant. Present the landlord with a credit worth tenant. Even if you are not allowed to sublet, the landlord will be obligated to mitigate his losses by looking at the new company. You may need to pick up a portion of the new tenant’s rent to close the deal.

Check Out Related Legal Topics:


Purchasing A Business – Learn 4 Practical Tips When Buying A Business

Alternative Dispute Resolution – Mediation Vs Arbitration

Legally Binding Contract – Written Contract Vs. Oral Contract

Buy Sell Agreement – 3 Benefits Why You Should Use One

Protecting Your Assets From Your Business Debts

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