Landlords are sneaky in the way they word leases. The first year, everything might seem fantastic with your beautiful new office space.
You got a great rate on your rent. And, your share of the CAM fees appears to be reasonable. But in the second year and beyond, what you pay for rent increases dramatically.
And, other fees are way more than expected…with no end in sight. What happened?
What happened was the owner made sure the lease was written so what you pay steadily increases over time.
One way to do this is by inserting escalation clauses into your contract. Escalation clauses increase your rent depending on a specific trigger. The worst of these are those tied to the Consumer Price Index.
With these types of clauses, rents rise as inflation does. They can cause what you pay to do business in your space to skyrocket. If you have an escalation in your contract without a limit as to how high it can go, you could end up paying too much in rent.
This won't happen if you have your tenant rep write your lease for you. Then, there won't be any misleading language. Only what's best for you!
Have a tenant rep look at your lease regularly.
Some companies offer complimentary lease reviews. But a lease review should be only done by a broker specializing in the field of healthcare real estate.
Only a healthcare real estate agent knows the unique needs of your field. Circumstances change, and a lease needs to reflect that.
Understand the Wording
When you sign a lease, you're taking on a big responsibility.
If you default, your landlord could come after you or your business. It's critical you only sign a lease that contains language you fully understand.
If after reviewing the lease you don't understand something, ask your tenant rep what it means.
No Verbal Agreements
Sometimes, landlords defraud you by using verbal agreements. There's nothing in writing, so these agreements mean nothing.
Verbal agreements do not hold much water in a court of law. So, if you were promised something and it's not written in the lease, the promise is worthless. A landlord that reassures you that he'll do something but doesn't include this promise in the lease cannot be trusted.
This also holds true for renewal terms. If you need renewal options, they absolutely must be written into the original contract. It's a business.
And a landlord that doesn't put things in writing isn't very good at doing business.