Good job! Hopefully, you also properly formed your business entity and are now ready to rent office space and open your doors. Check. You find a workspace that looks perfect! Now what?
Don’t move in quite yet… Before you sign a commercial lease, consult with legal counsel since the risks and liabilities associated with commercial leases are vastly different than what you might be accustomed to in any residential lease.
First, many commercial lease terms require a personal guarantee which means the guarantors are personal liable for any associated costs under the lease including and potential remedies available to the landlord if there is a default (think lots of attorney’s fees). Also, you may be responsible for the entire rent for the entire terms of the lease if there is a default with limited legal defenses. Consequently, it is very important to understand all of the financial costs and liabilities associated with your commercial lease before your sign it!
Your commercial lease may be your biggest business expense and your largest long-term financial liability for your new business. Please contact competent legal counsel to draft and negotiate a favorable commercial lease up front so you can focus on continuing to grow your business when the doors open!