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Understanding different types of commercial real estate leases

When a person decides to start a business, there are many factors that need to go into consideration. One of the biggest aspects to consider relates to where the business will set up shop. There are often many options to choose from when it comes to commercial real estate, but California entrepreneurs may want to ensure they understand their lease agreements.

The type of lease involved with renting a commercial space can depend on various factors, including location and landlord terms. Individuals may be asked to sign a percentage lease, which involves the lessee paying a base rent along with a percentage of the monthly sales. Commonly, this type of lease is utilized for mall spaces and retail businesses, but it could also be used elsewhere depending on preferences.

Business owners could also be asked to use a net lease. These leases involve paying rent along with some or all of the taxes, insurance or maintenance of the property. With a double net lease, the tenant is responsible for rent as well as taxes and insurance. For a triple net lease, responsibility for rent as well as taxes, insurance and maintenance fall to the tenant.

Fortunately, business owners do not simply have to accept any commercial real estate lease presented to them. They could negotiate the terms of the contract as they desire. Because this type of transaction could be complex, it may prove wise for interested California entrepreneurs to consult with their legal counsel regarding their best options when it comes to creating, negotiating and signing a commercial lease.

Source: thebalancecareers.com, "The Different Types of Commercial Leases", Lahle Wolfe, Accessed on May 28, 2018

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