#21 When you're not familiar with your commercial lease terms
Entering into a commercial lease is such an exciting time for a business owner. With your vision finally coming to fruition and the fit out to manage, it’s not uncommon for business owners to get caught up in the fun part and not set aside the time to fully understand their legal obligations.
In this episode, I discuss some of the most common things people miss when entering into a commercial lease and how getting caught out can lead to serious financial and legal problems down the track.
I talk about the importance of understanding what you’re signing, including the terms of rent, rent increases and outgoings so that you can factor these into your financial projections. I also talk about understanding your time frames to exercise an option, your make good obligations and why thinking ahead could save you a lot of money and hassle in the future.
TOPICS DISCUSSED AND WHERE TO FIND THEM:
[0:55]: How business owners often don’t focus on planning and preparation when they are caught up in the excitement of a new lease
[1:45]: When entering into a lease, you need to first negotiate the terms then go through the documents thoroughly before signing
[2:40]: How it’s important to be clear on the rent and rent increases in the terms of the lease
[3:45]: How it is critical to understand the outgoings you will be invoiced for so you can factor into your projections and cash flow
[4:30]: How you need to be aware of the time frames you have to exercise an option under the lease. If you miss it, there is no legal way to cover you.
[6:00]: How you need to understand what the make good obligations are if and when your lease comes to an end
[7:30]: How you may be able to negotiate the make good requirements but if you’re not able to, you may be left with a huge financial expense. Take lots of photos to record the original condition of the space.