Various types of leases exist - completely understanding the differences between NNN leases and a gross lease can be extremely important. NNN Leases - true passivity for the Investor will help to explain a portion of the NNN lease. Once you understand the type of lease you are putting together then you must put together a few other pertinent details.
Prior to negotiating the terms of a lease, outline thoroughly provisions that would promote your business. Before entering into a binding contract, decide the term of the lease;
A short term lease yields flexibility and more leeway to change your demands after a given period. Though long term leases are less supple, they provide stability. The negotiating process will take seemingly perpetual give-and-take, but settling for wary provisions is foolish. While the list is boundless, beware of the following stipulations:
- Assignment Clauses;
- Personal Lease Guarantees;
- CPI-Based Rent Increases;
- Permitted Use Clause;
- Limitation on Improvements; and
- Relocation Clause
It is important to understand why these lease stipulations can be unfavorable depending on the verbiage used and how they are negotiated.
Although a lessee analyzes the provisions listed by the owner, he/she may want to insist on additional terms;
- Exclusion Clauses;
- Security Terms;
- Space Boundaries;
The very most important thing to remember when negotiating a lease - EVERYTHING IS NEGOTIABLE! and maybe even more important - hire a professional, it costs you nothing to engage an agent as your tenant representative.