Leasing a commercial property can be a significant investment for your business, and the lease agreement is a crucial element of that investment. It is important to negotiate the terms of your lease agreement to ensure that it meets your business needs while also protecting your interests. One common mistake that tenants make during lease negotiations is allowing the other party to turn their lease agreement into a blank check. In this blog post, we’ll discuss what this means and how you can avoid it.
What does it mean to turn your lease agreement into a blank check?
When we say “blank check,” we’re referring to a situation where the other party (usually the landlord) has the ability to charge you for any expenses related to the property without any restrictions or limits. This can happen when tenants don’t negotiate the operating expenses and common area maintenance (CAM) charges in their lease agreement. If these charges are not properly defined and capped, the landlord can essentially charge you for anything and everything related to the property, leaving you with an unexpected bill at the end of the month.
How to avoid turning your lease agreement into a blank check:
So, how can you avoid this situation? The first step is to negotiate the operating expenses and CAM charges with the other party. Ask for a cap on these charges, which will limit the amount you are responsible for. You can also negotiate to have the right to review and audit the landlord’s expenses to ensure that they are accurate and reasonable. It’s essential to have clear definitions of what expenses are included in these charges, so there are no surprises later.
Another way to avoid turning your lease agreement into a blank check is to negotiate rent escalation clauses. These clauses determine how much your rent will increase over time, typically on an annual basis. By negotiating these clauses, you can avoid unexpected rent hikes that could otherwise eat into your profits.
Lease negotiations can be daunting, but they are an important step in securing your business’s future success. Don’t let the other party turn your lease agreement into a blank check by neglecting to negotiate the operating expenses, CAM charges, and rent escalation clauses. Work with a real estate attorney to ensure that your lease agreement protects your interests and meets your business needs. By taking control of your lease negotiations, you can avoid unexpected expenses and feel confident in your business’s future success.