Is Accelerated Depreciation on Real Estate Worth the Cost?

Is Accelerated Depreciation on Real Estate Worth the Cost?


Signing a retail lease is final, and once you sign it, there is no going back. That’s precisely why you need to be careful that the contract you’re approving is entirely what it’s supposed to be and what you have agreed.

It’s thus vital to understand the terms, how they impact you, and that the deal you’re getting is the best one you can get. To be sure of all of that, and more, you need to understand the lease. 

With that in mind, we wanted to explain all the vital things you need to check before you sign anything. 

You Need to Read the Entire Lease

It might sound like a simple suggestion, but it is vital that you read the entire lease word for word. If that takes a long time to achieve and to understand everything adequately – it’s still critical that you do so. The most important thing is to know that what the lease says your obligations are, is what you previously agreed to.

Many landlords tend to use general leases, which may not include all the specifics of your deal. Besides that, they can make mistakes, which is why it’s good for the other party to double check everything.

Ask Yourself About the CAM Terms

Most leases have CAM or Common Area Maintenance, which includes fees that you need to pay. However, if you’re renting part of a building, you’ll have to pay a fair percentage of these fees, not everything. 

It’s often the case that landlords try to get the tenants to pay for a much larger part of these fees than they should, so make sure they haven’t increased the cost for you.

Make Sure to Check the Actual Square Footage

The landlord and the lease might say one thing, but reality can be quite different. That’s especially true with square footage because retail tenants tend to make substantial changes in the rental space. You’ll probably do the same thing yourself, but if you’re not the first tenant, then the previous one might have changed something as well. 

Plus, as you’re renting usable space, the original square footage is likely to have changed significantly.

In the end, it’s not unusual for landlords to bend the rules a bit and inflate the numbers, which is why you need to make sure that the actual square footage is the same as it says in the lease, all before you sign it.

Additional Things to Check

  • What’s your responsibility with Capital Expenditures? Make sure it’s reasonable. 

  • Make sure that the lease doesn’t say that the landlord has the right to terminate the contract when you want to hand it to someone else or sell your business.

  • Always check for arbitration clauses and see if they are mandatory. Make sure that the terms are favorable for you.

  • Ensure that the cure period, or the period in which you can rectify a breach of contract, is long enough for you to make amends.

Always Have an Agent Representing You

Commercial rental leases and all other commercial leases are very complex, so it is still good to have someone alongside you, that has the professional knowledge of how they work and how the entire industry operates.

What’s more, these agents can help you achieve the best possible deal and will represent you in the negotiations and more. They will always be serving your needs, so you can rest assured that everything will go according to your desires.

What Should a Retail Tenant Check Before Signing a Lease?

What Should a Retail Tenant Check Before Signing a Lease?

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