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Do you understand your commercial lease terms?

As with any major transaction, leasing commercial property carries certain risks. You can minimize the risk, though, by ensuring that you have a solid lease agreement.

The terms of a commercial lease can be negotiated, and below are some basic things to consider before signing a commercial lease.

Rent clause

Even if the monthly rent seems agreeable to you, you may still want to look at other factors in the rent clause. These factors could include automatic rent increases and how much rent could increase. It may also be possible to negotiate for a lower rent if you make improvements to the property.

Premises use

Your commercial lease may also provide details about what areas of the premises you will use and how you and other individuals associated with your business will access those areas. When renting an entire building, the street address may be a sufficient description of the premises, but if you lease only a certain portion of a building, the lease should detail the exact space you will use and any areas of the building to be shared with others.

The landlord could also put restrictions on the type of business to be conducted on the premises, so it is important to note such restrictions and determine whether the terms of the lease could prevent future business growth.

Maintenance

Requirements regarding the maintenance of the property are another important aspect of your lease. You certainly don't want to find yourself on the hook for taking care of property issues that are unrelated to your business, so it's important to ensure that the lease provides specific details as to who is responsible for specific maintenance issues and repairs.

For more on real estate transactions, please see our Hawaii real estate law overview.

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Law Offices of Reuben S. F. Wong
1164 Bishop Street, Suite 1006
Honolulu, HI 96813

Toll Free: 888-567-4597
Phone: 808-531-3526
Fax: 808-531-3522
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