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3 red flags to look out for when leasing commercial property

On Behalf of | Apr 15, 2021 | Real Estate Law |

Some entrepreneurs purchase their business properties while others choose to lease property for their headquarters or offices. Leasing commercial property in San Diego, California, (instead of buying) offers several benefits to the savvy business owner. Examples of these advantages include:

  • No costly down payment
  • Lower move-in expenses
  • Freedom to relocate after the lease expires
  • Reduced monthly expenditures
  • Lower (or no) building maintenance and repair costs

Of course, not all commercial leases provide proper tenant protection. If the space you are considering requires you to sign a lease compromising your finances, it is wise to continue your search.

How can you tell a bad commercial lease from a good one?

In most situations, the best way to make sure your lease is fair is to have a business law attorney review the agreement. An experienced lawyer knows what to look for in commercial leases and can offer authoritative guidance in all your business dealings. In the meantime, the following list contains three red flags to watch out for in business property leases.

  1. Pass-through costs. Avoid leases that require you to pay an unbalanced portion of the building’s utility costs. These expenses should only arise in connection to the space you are using.
  2. Undisclosed or hidden fees. Most commercial leases contain many provisions and complicated legal language. Unless you are familiar with California business law and real estate, it is easy to miss these undisclosed fees. Ask an attorney to review the document before you sign.
  3. Excessive lease length. Getting tied to a building for an excessively long period may not be wise. If the lease stipulates that you must remain a tenant for longer than two or three years, you may want to look elsewhere.

Anytime a lease compromises your rights and your finances, it is not a beneficial arrangement. Keep searching for the right property or seek guidance from a legal authority.