The (Not Boring) Boring Small Business Bookkeeping and Accounting Podcast

Signing a Commercial Lease? Top Risks Small Business Owners Need to Know. S9E5

Paul Rosenblum Season 9 Episode 5

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0:00 | 2:42

Signing a commercial lease can feel like just another business task, but one missed detail can create expensive problems for years. Our favorite Bookkeeping Mensch, Paul Rosenblum, explains why commercial leases are major long-term financial decisions that can directly affect the survival and stability of a business. He walks through the real-world consequences of missing important details, including massive rent increases, responsibility for building problems, or even being forced to relocate after customers have become attached to a location. Careful attention to detail, along with hiring the right legal help during the process, can save small business owners major stress, disruption, and money in the long run.

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Short episode #2: Signing a Commercial Lease? Top Risks Small Business Owners Need to Know

If you are a business owner who is signing a commercial lease, this short episode is for you. Commercial leases are different from residential. At least in NYC, residential leases are protected by rent stabilization laws, and the percentage of increases are regulated by the city council. 

However, commercial leases are not. If you sign a 3-year standard commercial lease, at the end of the lease, there is really no protection that the lease won’t go up by 200%, if the landlord wants to.  Property taxes could go up as well. So, before signing a commercial lease for your office or store location, read the lease carefully or hire a lawyer to help you add any riders that you’d like to be included. In one case with one of my clients, they did just that --   they added a rider, included it with the signed lease, but the landlord only signed the lease and not the rider. The rider had specific information in it about how much the lease could go up when the current one ended.  Yes, the lawyer should have caught that, and immediately did something about it, but it was missed somehow.  Sometimes it’s worth spending the extra money on representation to make sure that this kind of thing doesn’t happen.  Also, you might want to add a rider saying that if there is a pest problem, that the landlord is responsible for that, not you, the commercial tenant. Lawyers’ costs are deductible, and you’ll have peace of mind. Just get the right lawyer, someone who will carefully go over the paperwork. 

Protect yourself, because you don’t want to be forced to move after a lease is up, especially if your business is a store and a location that your customers feel comfortable with. 

I’m Paul Rosenblum

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