Those interested in commercial leases in Los Angeles may understandably be overwhelmed by the various types of terms of agreements available. Unfortunately, entering the wrong types of agreements for commercial leases can be financially devastating long term. Comparing the many options and the possible expenses, beyond just monthly rental amounts, is paramount.
One type of commercial lease is a fixed or flat lease, where a particular rent is established for a certain time period. A gross lease is another option for a small business owner. With this option, the tenant will pay a flat amount each month, and the landlord will pay for any building operating costs. In some situations, the tenant will also pay for air conditioning, electricity and heat. Such a lease typically features an escalation clause, which lets the landlord boost the rent each year to make up for increasing expenses.
A third lease option is a step lease. With such a lease, the rent rises by a particular amount each year during the agreement’s life. This increase is helpful for covering the expected expense increases that the landlord will incur. The increase, however, is based not on actual costs but on estimated costs.
With the many options for commercial leases available, an attorney can provide business owners with much-needed insight into potential lease agreements. Then, the attorney can negotiate leases on their behalf. The attorney’s ultimate goal is to ensure that a Los Angeles business owner’s best interests are represented at all stages of the process.
Source: Findlaw, “Types of Leases“, Accessed on July 13, 2017