I'm a small business owner about to sign my first commercial lease. It's a gross lease. I've read it, and there are just a couple things that I wonder about."Payment of Tax Increase. Landlord shall pay all Real Property taxes applicable to the Premises; provided, however, that Tenant shall pay, in addition to rent, the amount, if any, by which real property taxes applicable to the Premises increase during the periodof this tenancy". . .There is a similar provision about increases in Property Insurance. Is this standard? I'm nervous about agreeing to pay a possible unspecified amount. I wonder about adding an "opt-out" clause wherein if these payments increase I have the option to break the lease. Or am I being paranoid?Second: ". . .and that this lease is binding upon said corporation and each individual signing this Lease in accordance with its terms."Does this mean even if my company goes bankrupt I would be personally responsible to maintain the lease (with my personal credit in jeopardy)? Is this standard? Should I try to get it struck?Thanks.
State/Country relating to question: Colorado
Thank you for your question.You are not being paranoid as those are valid questions. Usually on a Commercial Lease such conditions do exist (simply because commercial leases are more long-term, and the owner of premises wishes to transfer the additional costs to the tenant if those costs are unknown). Putting in out- clause may be a good idea--you may want to base the clause on a percentage (for example, you have the right to break the lease if the taxes increase more than 10% annually). The second point is correct--if you sign a personal guaranty, you are liable even if you no longer stay in business.Good luck.Dimitry Alexander Kaplun40400.1445009259
Thanks. Is the personal guarantee pretty standard in such situations (one-owner S-Corp)?
That is very standard--while you can attempt to strike it down, you are unlikely to succeed as most landlords require this guaranty as a means of keeping you personally liable.Good luck.Dimitry Alexander Kaplun40400.1476753472
Licensed in PA & NJ , specialize in business/contract disputes, immigration, estate creation & admin
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