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Madison Clark

This article discusses what you need to know before signing a commercial lease in Wisconsin.

The secret to signing the best business lease is to do your homework. Examine the building owner, landlord, zoning rules, environmental expectations, and nuisance regulations in particular.  

Know how much you'll have to pay, what you'll be paying for, and how much your rent will rise each year. Some leases require additional fees (such as utilities, insurance, or maintenance), while others combine all of your costs into a single monthly payment.  

Determine how your lease will be transferred if your company closes or you relocate. Assignment of the lease, which permits another business owner to entirely take over the lease, and subletting are two examples. 

This post is for business owners who are considering leasing a commercial space and want to make sure they understand the lease agreement. 

For any new business owner, signing a lease is a crucial step. Whether you're launching a store, moving into an office space, or renting out production facilities, you'll need to reserve a location for your business at some time. The world of commercial real estate is difficult, and finding the space you need can take years.  

After you've chosen the right location, signing the lease may seem like an inconvenient last step before you can get settled and focus on your business. A company lease, like most legal agreements, is an important document that necessitates considerable investigation.  

Before signing a lease, there are two essential stages to follow: 1) Conduct thorough research, and 2) become familiar with the common statutes included in business leases.  

Vetting the landlord, determining the building owner, investigating zoning laws, and gaining a general sense for the region are all steps in the research process. Make sure you understand the payment structure, your personal risk exposure, the transfer structure, the landlord's preferred holdover rate, and any nuisance terms in your lease before signing it.  

The Difference Between a Commercial and a Residential Lease  

There are some key differences between a residential and a commercial lease. For starters, while both involve a landlord renting space to a tenant for a fee, a residential lease cannot be utilized for business reasons.  

Another distinction is that in a residential lease agreement, renters are usually not liable for paying property taxes, whereas in a commercial lease agreement, the tenant is normally liable for paying at least a portion of the property taxes.  

Although commercial and residential leases are similar, there are a few key variations, such as the length of the lease and who pays the property taxes.  

A business lease agreement components:

For a business lease agreement to be valid and enforceable, it must have certain characteristics and crucial information. The lease should include at a minimum information on the rent, security deposit, lease period, and any additional charges the tenant may be responsible for.  

The distinction between exclusive and allowed use is important for small business owners to understand. An exclusive-use contract might be especially useful for small business owners in competitive industries.  

The cost of rent, additional fees, the security deposit, and the lease length are all important aspects of a business lease.  

Investigating the neighborhood, the landlord, and the terms of the contract  

You'll need to do some homework before signing a commercial lease deal. While investigating, make sure you follow the instructions below.  

1. Gain a thorough understanding of the area.  

If you're selling a product or service to the general public, analyze the neighborhood and obtain a decent notion of your possible customer while looking for a new location. When it comes to a small business's success, location is essential, so when you're looking for new premises, take your time to select the perfect new home for your company. This process can take two years or even more, so plan ahead if your current lease is coming to an end.  

2. Learn more about the landlord and the owner of the building.  

Understanding more about the landlord and building owner is an essential component of research that is often missed. Your direct landlord may or may not be the genuine owner of the building. In any case, learn everything you can about the landlord and building owner. You're about to join a business partnership with them, so be sure you know who they are, what their financial status is, and whether or not they're paying their bills on time.  

In some areas, for example, if a landlord fails to make payments to the building owner or mortgage payments to a bank, the business or renter may be evicted in the case of foreclosure — even if the firm has made all of its payments on schedule. That's only one example of how a landlord-tenant-building-owner relationship might go wrong. Businesses can undertake a public records search to learn more about the landlord. You can also ask for documentation connected to the landlord's limited liability company or business entity to see if it's a good fit for your company.  

3. Learn about zoning laws.  

The laws governing zoning are another factor to consider. While your landlord may designate your area for a specific purpose, such as running a restaurant, you must ensure that the landlord's intentions are legal in your municipality. There are times when a landlord or building owner believes they may lease their space to a specific sort of business, but the zoning regulations in the region prohibit it. You may ensure that your business can run without substantial legal hassles from the town or city in which you're operating by harmonizing these two details.  

4. Educate yourself on nuisance laws and environmental issues.  

One of the most crucial components of obtaining a lease is being able to run your business to its maximum potential once it opens. Many leases include clauses about noise, odors, and equipment.  

Before you sign anything, it's also a good idea to do some basic research on the property's environmental regulations. These laws are frequently overlooked by landlords, and they could be used against you.  

Perform thorough diligence on the property before signing a lease agreement. Make sure to do your homework on the neighborhood, the landlord, the zoning regulations in the region, and any other nuisance or environmental rules that apply to the property.  

Key Considerations:

When revising your lease, there are a few things to bear in mind. The most basic and crucial part of any lease is the rent structure. You can better estimate budgets and if you can stay in business in this new facility by analyzing how much you pay each month as well as how much your rent will climb each year.  

The terms of the lease are also crucial. Consider the difference between short-term and long-term leases. Long-term leases can be a good investment if you're starting a business in a developing or growing market, whereas short-term leases provide you the freedom to relocate or close your firm if things don't work out.

Request a consultation with an attorney. Call our office at (630) 324-6666 or schedule a consultation with one of our experienced lawyers today. You can also fill out our confidential contact form and we will get back to you shortly.

For information on commercial leases in Iowa, click here.

Disclaimer: The information provided on this blog is intended for general informational purposes only and should not be construed as legal advice on any subject matter. This information is not intended to create, and receipt or viewing does not constitute an attorney-client relationship. Each individual's legal needs are unique, and these materials may not be applicable to your legal situation. Always seek the advice of a competent attorney with any questions you may have regarding a legal issue. Do not disregard professional legal advice or delay in seeking it because of something you have read on this blog.

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