Before you bind your company to a commercial lease, you must understand what you agree to before signing the dotted line. Learning about some of the most critical aspects of these agreements and reviewing individual lease terms carefully can equip you to make well-informed decisions about renting space for your business.
The Essentials of a Commercial Lease
There are things to consider when thinking about pursuing a commercial lease. Likewise, knowing the positives and negatives of the contract you are signing is wise.
Stipulations About Permissible Uses, Operating Hours, and Business Insurance
One thing you should know about commercial leases is that they typically do not grant lessees unfettered use of a property. They commonly contain clauses that set limitations and conditions on companies’ onsite activities. Engaging in any type of use of a property inconsistent with lease terms could represent a material breach of an agreement. Likewise, a lease may have provisions restricting your operating hours or when you may perform maintenance activities.
Requirements involving business insurance coverages are another common commercial lease term that imposes conditions on your license to use the premises. A lessor may require you to carry a specific amount of general liability insurance or casualty coverage. This requirement mitigates lessors’ risks if businesses’ use of property results in physical damage or a liability claim.
Maintenance Responsibilities
One of the most significant differences in what a commercial lease entails compared with residential leases is that renters have more maintenance obligations. When something in a residential unit requires repair, it is usually the landlord’s responsibility to fix it. In contrast, commercial leases typically have to handle non-structural repairs and maintenance. It is partly because they need to make more modifications and improvements to properties than individual lessees. Review maintenance responsibilities and assess costs to estimate your operating costs accurately.
Business Insurance to Assist With Lease Payments
An interruption in your business’ revenue could put you at high risk of defaulting on lease terms. Not being able to pay rent is one of the significant reasons struggling small businesses have to close their doors. Getting a business insurance policy that can help cover essential overhead costs like rent could keep you afloat in the face of significant hardship and enable you to continue making timely rental payments.
Ultimately, a commercial lease is a big commitment. These agreements tend to be longer in duration than residential leases, and lease terms could significantly impact your operations for the next several years. Furthermore, leasing costs and the additional expenses associated with using an operating space may be a heavy weight on your budget. Review agreement terms thoroughly to ensure they are consistent with your company’s needs, and you can exercise full compliance.
About Haughn & Associates
Founded by Michael Haughn in 1986, Haughn & Associates is a full-service, family-owned, independent insurance agency based out of Dublin, Ohio. H&A strives to provide the best possible price and unique insurance solutions across a myriad of industries, including construction, IT, Habitation & Commercial Property, Agriculture, and Engineering. Devoted to providing the best of business insurance, life and disability insurance, personal insurance, employee benefits, and bonds, H&A is proof that success lies in long-standing client relations and satisfaction. To learn more about how H&A can be of service to you, contact us at (877) 802-2278.
