When you are planning to look for an Office space for Lease you should understand the terminology of the Lease contract . It is always best to have your lawyer (preferably one specializing in commercial real estate) review your agreement!
However, here are a few points you have to pay attention to:
- When you are leasing an Office building /space/ unit what is your costs on top of base rent? It can include property tax, insurance, utilities, maintenance, common area costs and repairs.
- When you are leasing an Office building /space/ unit who is responsible for Common area maintenance? All tenants generally share common area costs. Examples include fees for snow removal, janitorial services, landscaping, grass cutting and property management.
- What is a Gross rent lease? A type of commercial real estate lease under which you pay a single amount to the landlord that covers base rent and all other expenses.
- What is Triple net lease? A type of commercial real estate lease under which you typically pay the base rent, plus property taxes, building insurance and utilities, as well as other operating and maintenance costs. The landlord assumes no costs, other than those for structural repairs.
- What is Tenant improvement allowance? A cash amount offered by a landlord to help you pay for renovations to a leased space. The allowance is usually a certain amount of money per square foot of rented space.
- Which are the Trade fixtures? Items in a leased space that you can take with you when you move out. A trade fixture can generally be easily removed without damaging the property. Examples include furniture, inventory and computers. Get advice from a commercial real estate lawyer before signing a lease to clearly define trade fixtures and to seek exclusions for assets you want to take with you when you leave.
- What happens to Leasehold improvements (also known as tenant improvements) ? These are renovations to a leased commercial real estate space to make it suitable for your business. Unless otherwise specified in the lease, any improvement that is attached to the building usually becomes the property of the landlord—meaning you can’t take it with you when you move out. Examples can include machinery, flooring and built-in shelving. Get advice from a commercial real estate lawyer when negotiating a lease to seek exclusions for assets that you want to take with you when you leave.
- Does the Landlord has the right to expand, relocate, change, demolish, upgrade the premises, or the common areas before or during the term?
- Pay attention to terms of the Lease! What are the consequences of landlord’s failure to deliver the premises on the commencement date?
- What are the the tenant’s obligations? To continuously occupy the entire premises? To use the premises for the specified uses only?
- Is parking is included in the leased premises or is the subject of a separate agreement?
- Is the Landlord’s obligation to insure? Where the premises are strata property, the strata corporation must insure the buildings. What types of insurance are required?All-risk insurance for building, improvements, common facilities; fire and extended coverage; consider also building bylaw endorsement. Boilers, pressure vessels. Third-party liability (including personal injury and property damage). Business interruption.
