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What red flags should you look out for in a commercial lease?

On Behalf of | Mar 30, 2022 | Commercial Real Estate |

Once you sign a commercial lease in Massachusetts, you may find yourself committed to the space for quite some time. Commercial leases often bind you to a particular rental property longer than a residential lease would, so it is important that you do your due diligence before you sign on the dotted line.

Per CBI Commercial, some commercial leases contain questionable language or clauses that may make you want to think twice before deciding to move your business into the space. Consider exploring other options if your review of a commercial lease agreement turns up any of the following.

Unreasonable tax escalation provisions

Tax escalation provisions dictate that you, the tenant, must pay proportionately more if taxes increase during your rental term. Tax escalation provisions, by themselves, are relatively common and not necessarily red flags. However, you want to make sure yours is reasonable and that the rate of escalation is proportionate to your rental space.

Lengthy lease renewal terms

You may find that your commercial lease agreement states that if you choose to renew it, you must do so for more than two years at a time. Consider this a red flag.

Vague language

A strong commercial lease is one that considers both sides and sets clear expectations for each. Anything left open for debate could potentially lead to a costly dispute, so the more thorough and clear a commercial lease’s language is, the better.

When you sign a commercial lease, you make a long-term commitment. Make sure you understand and agree with everything outlined in the commercial lease agreement before you sign it.