Common Legal Mistakes in Renting Office Space
The following information covers three common legal mistakes made by many people when renting office space. These mistakes can cost you – and your business – a load of cash if you’re not careful, so make sure you are watching out for them as you begin the rental process.
Mistake #1: Misunderstanding Insurance (Or Not Bothering to Understand It)
As a business owner renting office space, you’ll need to carry renter’s insurance that will cover your inventory, equipment, files, and whatever else is stored on the premises. However, it’s important to note that your renter’s insurance policy needs to work in tandem with the lease you’re signing.
Some office rental leases will cover certain types of damage, such as those caused by the building itself being in disrepair; others cover absolutely nothing and leave all insurance costs up to the renter. This means that before you buy a renter’s insurance policy, you’ve got to examine your lease paperwork and see what coverage, if any, is offered – and whether you think it’s good enough.
If there is no mention of insurance in the rental paperwork, chances are you’re on your own, but it never hurts to talk to the landlord about it. Sometimes, in fact, landlords actually require a certain amount of coverage before they’ll rent to you, which is another important question to ask.
Mistake #2: Failing to Examine All Clauses in the Lease
This sounds pretty simple, but it is a common problem: you’ve got to read the lease. Not only that, but you must ensure that all potential questions and all aspects of your agreement with the landlord are laid out within the lease. If it’s not in writing, it doesn’t count, and you’d be surprised how many people renting office space let the property owners get by with verbal explanations and promises.
If the landlord is responsible for the heating bill, or if your cost per month includes parking, great – but make sure it’s in writing. If the terms aren’t in the lease you sign, then legally they don’t exist. Conversely, you are liable for whatever terms are in the lease that you sign, so don’t skip over the fine print, and don’t hesitate to ask if you’re unsure what something means. Ideally, ask a lawyer or your insurance carrier, not just your landlord.
Mistake #3: Not Considering All Outcomes
Renting office space can be tricky simply because it’s difficult to tell what needs your business will have a year, or five years, into the future. Renting the proper amount of space, in a location that suits the business, sometimes involves making a gamble. Remember, though, that the property owner doesn’t share in this risk-taking, and it won’t be his or her problem if the office turns out not to suit your needs.
If you signed a contract, it’s your space until the contract is up. Many renters fail to take this seriously and assume they can withdraw from a lease if it turns out to be a poor fit for their businesses, an assumption that is patently untrue. There are, of course, a few loopholes that might be available, such as the ability to sublet the space to someone else, or perhaps the ability to transfer your lease to another more suitable property owned by the same landlord. However – you guessed it – if those loopholes aren’t in your lease, they’re not available to you. You thought about this before you signed, right?
Signing a lease on office space for your business is an exciting step. Whether it’s your first office or an upgrade from an existing space, whether it’s a new business or a growing one, your office rental is a great opportunity for advancement. Just remember to protect yourself by staying informed about the process of renting office space – and watch out for the common pitfalls listed above.
Getting Help Renting Office Space
Signing a lease for renting office space isn’t something to be taken lightly, and it can have serious consequences on the success of your business. Before you sign a lease or agree to rent, make sure you have a real estate lawyer in your area look it over to ensure your rights are protected fully and that you understand all clauses and obligations contained within the lease.