Contingencies in a commercial lease

Launching your start-up is exciting, and you find the perfect commercial space to rent. You’re tempted to just agree to whatever the landlord proposes, you’re so sure that the business is going to be a massive success.

Excitement is good, but you do want to take a step back and make sure you do not make an emotional decision. Before signing a lease, carefully consider the terms and the contingencies in the contract. These could become incredibly important in the future.

For instance, how are you securing financing for the business? Is there a chance it could fall through, perhaps if an investor pulls out? You may want to use a financing contingency so that you’re no longer obligated to rent the space if that happens.

Another potential option is to craft a contingency based on earning. Sure, the location looks perfect, but what if the foot traffic you think you’ll get just doesn’t show up? You may want to put in a clause allowing you to break the lease if it turns out to be a poor location after all.

If you’re going to have an inspection done on the building, you probably want to make your offer contingent on the building passing that inspection. Don’t agree to anything until you know the space is ideal and doesn’t come with any unpleasant surprises that could hinder your company.

These are just a few examples of the types of issues you want to consider in advance. Be sure you are well aware of all of your legal rights and the steps you need to take as you move forward with this process.

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