What to Look For in an Office Lease Agreement

If your business is growing and it's time to expand you are probably considering some new office space and need to know what to look for in an office lease agreement. Basically, a good office lease agreement will define all the terms and conditions of the lease and also the remedies that are available to both parties in the event of a breach.

Basics

Knowing what to look for in an office lease agreement can save you lots of money in the long term and make your tenancy more enjoyable. You should expect to have your office lease agreement include the current rental rate, penalties for late payments, and possibly an escalation clause that will outline in advance rental rate increases over the life of the lease. Carefully examine any scheduled rent increases and make sure you are comfortable that they are historically reasonable increases for your area.

Your lease agreement also needs to include the length of the agreement and by what means or notice the lease either automatically renews for another period or the written advance termination that may be required.

Competition Clause

If the office space you are leasing is any type of retail space, you will also want to make sure there is a clause that covers competition in order to prevent the landlord from leasing nearby space to a competitor, and expect to provide a list of specific competitors or types of competitors.

Maintenance

Make sure the office lease agreement covers who is responsible for maintenance, and if you are going to be responsible for any type of maintenance, include whether the landlord has a list of required vendors for maintenance services or if you will be free to choose your own. You also want to know if you have the right to make modifications or improvements to the property to better suit your business, and if you are will be required to return it to the state it was in when the lease began?

Insurance Requirements

Another thing to look for in an office lease agreement is a clause that covers insurance so you know exactly what types of insurance you need to carry as a lease tenant. The lease agreement should also spell out who is responsible for real property taxes and whether or not you can sublet all or some of the space. A commercial real estate agent and a real estate attorney should be consulted before you sign an office lease agreement.