What to Look Out For in a Building Lease

The big difference between a building lease and another lease is that it usually stipulates a different level of control that the landlord has. This control refers to specifics such as subletting and assignment. There are certain particulars that you have to review or take into account before placing your signature on such a document. Whether you are part of one of the members clubs London has to offer or making these business and informative decisions yourself, there are certain things to look out for.

Sometimes lessees sign agreements without reviewing all the terms that apply to the type of business they will be managing, the terms of termination, the length of the lease as well as taking bankruptcy and insurance into account. Some lessees will find themselves stuck in an agreement which they don’t have any control over, and this can seriously damage the success of the business.

First you have to know the parties involved. The person letting the property is known as the lessor and the person hiring the leased premises is called the lessee.

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Let us take a look at the things you should consider within the lease:

Business Activity

Look at the agreement closely, is there anything that is preventing your from managing or operating a certain activity on the premises or property. It’s often the case with new businesses to go into alternate directions with their business plan, check if the lease allows this, or if it is limiting you running a certain type of business.

Rent and Rent Increase

This section will go in depth about the rent agreement. Check that there are no rent increases that you aren’t aware of. This is a very important section and it’s advised to have a professional review the rent section. The penalties for being late with the rent or failure to pay will also be written here. See what the document says about tax increases, will they be making extra revenue out of this?

Duration and Termination

This part of the contract will stipulate how long the agreement will be in effect. Here you have to check that there are no extra conditions attached. Not checking this part might lead into you agreeing that your landlord can prevent you from terminating the agreement before a specific time. See if the landlord is allowed to terminate the agreement without an excuse, because this can lead to big problems.

Also have a look at the commencement of the lease, you and the landlord might agree that the space is available on a certain date, but then when you are ready to start your new business the property is not ready. Be sure to have the specific dated in the contract so that someone can be held accountable.

Use of the leased premises

At this section you  must also review the rent-able square foot space versus the usable space. This might not be the same, and before you know it you might be restricted from using certain areas of the building space.

When it comes to the usage of the premises, also revise if they are specific about the weekend and after hour use of the property. As a business owner you might have to work late or have employees work over weekend, is this allowed in the lease or will it cost extra to enable employees to enter the building?

Does the lease stipulate if the building comes with parking space to use freely or do you have to pay extra? If you are a start-up company extra expenses like parking can really hurt your initial success.

Improvements and repairs

To what degree is the landlord responsible for maintenance? Is this included in your rent payment or will it be at an extra cost? Have a look at the building destruction and interruption clause. Is the landlord responsible for  restructuring the building for instance if the place blows up over the weekend?  What is stipulated in the insurance agreement? Also check if you are allowed to make any adjustments or improvements to the property. Are you allow to extend your building? If you are responsible for your own improvements, are you allowed to use your own tenants? These are all things that need to be checked.

These are just some of the potholes you have to look out for and review with regard to a building lease. It is better to be safe than sorry, so be sure to read the complete document and don’t be afraid to ask questions. If you are educated regarding leases you will be saving yourself a lot of money in the long run.


What to Look Out For in a Building Lease – post coming from John Badger. John is a guest author at DryLand. DryLand serviced office space is   the best in London offices for rent.

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