Signing a commercial lease, also called a business lease, is a very important decision to make for your business. There are many factors to consider in deciding whether the space will be a good match for your business’ needs, and you need to make sure you fully understand the terms of the lease when signing in case there are any questions later on. The real estate attorneys at Himelman & Himelman are experienced with New Jersey commercial leases and can help you through this important process.
How are Commercial Leases Different from Residential Leases?
Like a residential lease, a commercial lease is a legal agreement between a landlord and tenant concerning the use of a space for a specified period of time in exchange for rent. However, there are some important differences between them:
- A commercial lease is not subject to the same consumer protection laws that residential leases are, such as limits on security deposits or expectation of tenant privacy.
- Commercial leases tend to have longer terms than residential leases and are more difficult to change or break once signed. On the other hand, businesses have different needs, and landlords are usually more open to negotiation on commercial leases than residential leases.
- Whereas residential leases usually have standard forms, commercial leases are more customized by the landlord. It is important to speak to an attorney when reviewing these unique contracts.
What is Typically Included in NJ Commercial Leases?
Although a commercial lease is usually custom-built to the landlord’s specifications, the following basic information can be found on most leases:
- The length of the lease, start date of the lease term and the renewal options.
- The amount of rent and when payments will be expected.
- Be sure to look out for an Escalation Clause, which details increases to the base rent over the term of the lease.
- What the rent includes and does not include, such as insurance, taxes, utilities, maintenance fees, or common area charges.
- The amount and conditions of the security deposit – usually not placed into an interest-bearing account like residential leases.
- The specifications and measurements of the space you are renting, and whether it includes common areas or elevators.
- Whether or not you are able to modify the space, who will pay for it, and what the requirements are for the modifications at the end of the lease. For example, if you add cubicles to the space, will you need to remove them when you leave?
- Who will be responsible for repairs or maintenance, including repairs and maintenance to major mechanical systems like heat, air conditioning, hot water, etc.
- Whether or not the lease contains a provision for tenant payment of Common Area Maintenance (CAM) charges, and what that provision includes.
- Whether the space can be subleased to another tenant.
- How any disputes about the lease will be handled.
- The requirements and penalties for breaking the lease.
Things to Consider When Signing a Commercial Lease
Here are a few important things to consider when you are looking for a space for your business:
- Am I sure I will be able to afford the rent for the entire term of the lease?
- Is my business likely to outgrow this space before the lease ends?
- Will I be able to modify this space to meet the specific needs of my business, such as adding cubicles, signs or equipment?
- Does the lease prohibit the landlord from renting out neighboring space to a direct competitor?
- Is this space legally and practically suitable for the work I’ll be doing here?
- (If applicable) Will customers be able to easily find and access this space?
- Will the landlord give a period of free rent at the outset of the lease to give me time to get the premises ready for use?
- Would it be a good idea to try to negotiate an option to renew or extend the lease?
- Will the landlord provide any monetary credit toward tenant improvements that I may be making to the space?
- Will I have to make any extensive modifications to the premises to bring it into compliance with local, state, or federal laws?
- Will I be able to utilize the premises for my intended use? Does my use comply with local zoning restrictions?
Contact Us Today
Finding the right space is critical to the success of your business. Signing a commercial lease is an important decision and should be considered very carefully. Experienced legal counsel can ensure that the terms of the lease are clear and fair, and that you understand what you are agreeing to when you sign. Contact Himelman & Himelman today to discuss your New Jersey commercial lease.