Red flags for tenants in commercial real estate leases

Renting commercial property here in Nashville can be a complex and exciting prospect. When reviewing a commercial real estate lease, it would be a good idea not to move too fast. Instead, it deserves a thorough review in order to be sure that the tenant’s rights and business interests are protected.

Part of the review of the lease should include a search for any red flags. A rental term of two years or more could constitute a red flag. Most business owners like to plan at least a few years out, but whether those plans come to fruition depends on a variety of factors. If one factor falls through, the remainder of the plan could falter as well. Having a rental term longer than two years could jeopardize future success if a company can no longer make the rental payments.

Many property owners work in an option for the tenant to renew the lease at the end of its term. If no renewal option exists or requires a renewal of over two years, it might give a business owner reason to pause. Some landlords attempt to have a renter give up his or her right to take action against them. This should definitely give a potential tenant a reason to hesitate.

A potential commercial real estate tenant cannot take chances when it comes to the future of his or her business. When locating a Nashville property from which to conduct business, few things are more important than the review of the lease before signing it. It may be a good idea to make some sacrifices for the sake of location, but not so many that it puts the future of the business at risk. Review the terms of the agreement carefully, and only sign when all concerns are addressed.

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