Common Mistakes When Renting Office Space

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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If you’re considering renting office space for your business, it is essential to understand that the commercial lease is a contract. Once you enter into the business relationship with your landlord, you will be bound by the terms of this lease agreement. So, do your investigation ahead of time, to be sure this lease fits your business needs.

Common Mistakes in Renting Office Space

Mistakes can be costly and can determine the success or failure of your business. So before renting office space for your business, avoid these common pitfalls. 

Mistake #1: Downplaying the Role of Insurance

Check your lease to see if your rent includes insurance. If not, you may be required to purchase coverage. You will usually want renter’s insurance to cover your inventory, equipment, files, and your other business assets. But, before you purchase coverage, examine your lease. Some office leases will cover certain types of damage, such as those caused by the building itself being in disrepair. Others cover absolutely nothing and leave all insurance costs up to you, the renter. This means that before you buy a renter’s insurance policy, you will want to talk to your landlord. Maybe you can negotiate more insurance coverage in your lease. Maybe your lease “as is” adequately protects your business assets.

Mistake #2: Failing to Examine All Clauses in the Lease

Carefully read all the provisions of your lease so you understand the terms, and there are no misunderstandings. You are held legally responsible for these clauses, so be sure you understand the meaning of the terms. Ask a lawyer, an insurance carrier, and/or your landlord for any clarity. And, be certain that everything negotiated with your landlord is laid out within the lease. If it’s not in writing, you may not get what was orally promised. So, if the landlord is responsible for the heating bill, or if your cost per month includes parking, make sure it’s in writing.

Mistake #3: Not Considering Future Needs

Renting office space can be tricky because it sometimes difficult to predict your future business needs. Renting the proper amount of space, in a location that suits the business, is sometimes a gamble. The property owner does not share in your risk-taking, and it won’t be the landlord’s problem if the office turns out not to suit your needs. If you signed a contract, it’s your space until the lease terminates. Many renters fail to take this seriously and assume they can withdraw from a lease if it turns out to be a poor fit for their businesses. However, you as the business tenant cannot easily break the lease. Some leases state the business can assign or sublet to another commercial tenant. But, this ability to transfer your lease to another might not be a provision in your particular lease. Alternatively your business could be thriving and you want to renew your lease. Check the terms to see if your lease offers this option to renew.

 Getting Help Renting Office Space

Signing a lease on office space for your business is an exciting step. Just remember to watch for the common pitfalls listed above. Before you sign, have a real estate lawyer review the lease agreement to ensure that you understand all the clauses and obligations contained within the lease.

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