Red flags to look for in a commercial property lease

When you sign a commercial lease, you take on a significant responsibility.

You want to maximize the benefits of your lease and sniff out any aspects that seem suspicious. Consider these red flags and how a lease should appear before you sign the dotted line.

Projections that are too good to be true

While reading through the documentation, look for inflated projections of business survivability, especially during times of economic struggles. Question claims for presented future work to do on the property, and also confirm by asking questions.

Unclear obligations and designations

A solid lease should lay out the responsibilities of tenants and landlords in thorough detail. If the language is vague or missing any significant details, you want to address those issues before signing.

Alarming turnover rates

Have you noticed businesses coming and going from the location often? A high turnover rate could be a clear indicator that there is an issue with the landlord. Determine if you can talk to the previous tenants to discuss any issues and look for commonalities in their complaints.

Pressuring you into verbal confirmations

When a landlord relies heavily on verbal confirmations and dodges putting things in writing, that is an immediate red flag. Questionable landlords often disregard legal action.

Lack of pass-through language on paper

Take a look at the property’s operating expenses history for the last two or three years to look for planned projects in the future. This can affect the pass-through terms of the lease, leaving you vulnerable to high rent increases.

Generally, if you have substantial issues with the lease, it may not be worth it to work with that landlord.