QUESTION: It looks like the economy is really improving. My husband and I think it would be a great time to rent one of the vacant commercial locations locally and open a business. We've never leased commercial space before. What do we need to know about leases?
ANSWER: Choosing the appropriate location for your business is the first step. It is fine to find a "deal" but if the space is not the best for your business, sales will suffer. There is a reason you have heard the expression "Location, location, location."
There are several types of commercial leases and negotiations with a landlord or his/her representative should be conducted carefully. Consider the amount that you will pay over the life of the lease.
A single net lease requires the tenant to pay a monthly lump sum base rent and all or a proportionate share of the property taxes. The landlord is responsible for all other operating expenses associated with the premises including property insurance and maintenance.
A double net lease requires the tenant to pay a monthly lump sum base rent, property taxes and property insurance. The landlord is responsible for all other operating expenses of the premises including maintenance.
A triple net lease requires the tenant to pay a monthly lump sum base rent, property taxes, property insurance and maintenance. There are a few legal defenses which may relieve a tenant of his/her responsibilities in a triple net lease. If the property is subject to an eminent domain proceeding, for example, the tenant may be released from the lease.
An absolute triple net lease, sometimes called a Bond Lease, requires that the tenant pay a monthly lump sum base, property taxes, property insurance and maintenance. Under an absolute triple net lease there are no legal defenses if a tenant fails to meet his responsibilities.
Leases for retail stores sometimes require the tenant to pay a percentage of sales. Also, stores located in malls have additional requirements such as participating in marketing activities or maintaining certain hours of operation.
Every commercial lease should be reviewed by an attorney, before the lease is signed.
Attorney Sylvia Heldreth is a certified specialist in real estate Law. Her office is located at 1215 Miramar St., in Cape Coral.
This article is not intended as specific legal advice to anyone and is based upon facts that change from time to time. Individuals should seek legal counsel before acting upon any matter involving the law.