Hi class,
Here is your assignment for this week: Discuss and agree on the 5 most important issues in negotiating a lease. The 3rd person in each group will post the 5 in order on the blog. This assignment is worth 2 points and due by January 3, 2012.
Have safe travels and a happy holiday season!!
Dr. Frost
Group 12:
ReplyDelete1. Knowing if there are any pass through expenses .such paying for the use of the building as wellas the rent expence.
2. Knowing how much you are paying for each square foot and realizing some of that space may be considered "dead space" in which you cannot end up using.
3. If there are common area maintenance fees in places where eveyonryone leasing uses like parking lots.
4. Do not sign a standard lease because you may need to make changes because it is a chiropractic office. read the lease thoroughly.
5. See if competing businesses can also lease as well as know if there will be a rent increase and if you can continue leasing over the years if the location is right.
Group 11:
ReplyDelete1. Knowing the terms of the lease- If you are planning on staying for a long time, landlords are typically willing to present better deals such as a free build out. But most state that your office needs may change and it’s a safe bet to negotiate a shorter-term lease with renewal options.
2. If you want to make improvements to the business- Businesses should ask for a clause that says they can make alterations or improvements with the landlord's consent and that consent won't be unreasonably withheld or delayed. But also to be aware of a clause that might state that at the end of the lease premises must be returned in their original condition.
3. Know the rent increases- If your landlord wants to continually increase the rent, try to arrange that a CPI rent increase does not kick in for at least two years. Then, try to get a cap on the amount of each year's increase.
4. Ask about common area maintenance fees- If the landlord is charging separately for these services, try to negotiate a fixed fee or cap on the amount.
5. (If you are looking to expand) Know about the right of first offer or first refusal for additional space - This means that if additional space becomes available you will be the first to have the option to buy before marketing to others, or that the landlord bring you any of the deals they are willing to sign with a third party and you have the option to match the deal instead.
Group 13
ReplyDelete1) Consider the building you will work in for atleast 5 years. How old is the building? Is there adequate security? Discuss possible heating and air condition system. possible roof repairs to plumbing issues
2) Consider a noncompete clause. This will specify that the business will have no competition from similar businesses occupying space in that building.
3) Consider subletting restrictions. Will I (D.C.) have the right to assign the lease to another D.C. if I plan on moving either upgrading to a larger office or consider moving out of state and selling the practice
4) Consider the office interior. Is the carpet good quality for the foot traffic through your practice. Will the walls or ceiling need to be painted and locate any check for cracks or other damage to the walls.
5)Consider the best lease option based on your financal income. Consider a graduated gross lease vs a gross or a adjusted gross lease. A graduated gross lease will have a set monthly fee. ie $1,600 a month for first year, and increase each year after but its easier to manage financally.
Group 2
ReplyDelete1. Check Maintenance
Repairs to leasehold improvements, including HVAC, electrical, plumbing and telephone wiring systems. A critical priority for you is a right to a self-help remedy to promptly correct a maintenance problem rather than being forced to wait for the conclusion of a dispute before the problem can be addressed.
2. Check Landlord's Services
A landlord in a multi-tenant building will often provide janitorial service, common area maintenance and other essential services. Defining standards for the landlord's obligations to provide these services and a meaningful remedy if the landlord fails to provide the services is critical to you.
3. Check Operating Expenses
Operating expense reimbursements are a very significant cost to you. Most of lease negotiations usually involve a discussion of appropriate landlord expenses to be included in or excluded from operating expenses.
4. Check Waiver of Claims
Both parties should agree to recover losses to their property through their own insurance coverage. This provision is absolutely critical for the you, who generally has more at stake because a you can potentially cause the destruction of an entire building and be subject to liability far in excess of its liability insurance limits.
5. Check Signage/Parking
Tenant signage and availability of parking for the office staffs or patients are often critical issues to be addressed in the lease.
1. lease fee
ReplyDelete2. How long is contract time? 3 years or 5 years
3. Who is repair for natural damaging property or equipment.
range of restoration.
4. What is include? electricity, water or interne.
5. 1st floor or close to elevator side.
1. Location and Description – Accurately describes what you intend to rent. For example, are you renting an entire building or just a portion of the space? Also, consider the location and is the rent appropriate for the area.
ReplyDelete2. Rent - The amount of rent expected monthly. Also, consider any automatic rent increases (what they're based on, when they are in effect and how much the increase should realistically be), tenant improvement deductions (whereby the landlord agrees that approved improvements to the building will result in rental decreases), how much of the landlord's operating costs will be passed on to you and establishing a method for dealing with unanticipated rent issues and increases.
3. Maintenance – Aside from the initial issues of what bills will be paid and by whom, pay careful attention to who is responsible when problems arise, how any maintenance issues are to be resolved and how they will impact rent. Also, consider who is responsible for lawn care, snow removal, etc
4. Improvements and Alternations - The ability to improve and alter the building, such as design, sign/advertisement usage, what is allowed and what is not. Also who should pay for any changes and how those changes impact rent
5. Exclusive – Consider ensuring that competitors can't move in next door
Group 16
ReplyDelete1.Rent- The agreed upon rent should be clearly and consistently stated. Whether the rent is shown on a monthly or annual basis or based on square footage or a total for the full term, all amounts must be consistent. The due date for the rental payment should be clearly stated and a grace period negotiated before a penalty is charged.
2.Identify the Premises- It is important to include the dimensions and/or square footage of the leased premises. Both landlord and tenant need to make sure at the outset of the lease the precise square footage and how it is calculated to avoid disputes later because costs and expenses are often tied to the square footage of the premises. How much is usable?
3.Repairs and Maintenance- In many lease situations, the landlord is responsible for most if not all of the maintenance and repair obligations and the tenant is only responsible for keeping the premises in good order and condition, ordinary wear and tear excepted. However, in many situations, the repair and maintenance responsibilities may be divided. If so, it is necessary to thoroughly and carefully specify which party is responsible for what repairs and what maintenance.
4.Pass on Expenses- Review the expenses that the landlord will pass on and make sure that they are reasonable and directly related to the building’s operations. The tenant should not be responsible to pay any increased expenses or costs of the landlord, which result from the landlord’s or other tenants’ activities or improvements unless tenant participated in such activities or required such improvements.
5.Lease Term/Commencement- How long is the lease? When does the lease term begin and end? It would be to the D.C.’s advantage to start up during peak season and end during a slow season.
1. Length of the lease - Short term leases offer flexibility in case your current location is not meeting your needs, however landlords are more likely to offer better rent pricing for long term agreements. Try bargaining a short initial lease such as a year, with options to renew for 3-4 more years at the end of the initial lease.
ReplyDelete2. Maintenance/operating costs - Landlords may charge separately to maintain common areas such as walkways and driveways, or for heating & cooling, etc. It is recommended to try to cap or set a fixed fee for these costs.
3. Tenant Improvements - Starting out as a new DC on a budget often means waiting until you have a foot up to decorate or obtain the equipment you desire. Make sure a clause is included in the contract to allow improvements to the building with landlord consent that will not be unreasonably delayed. Also be aware of clauses requiring the building be returned to original condition at the end of the lease period.
4. Option to renew - It would be unfortunate to decide you like your business location/premises and have to renew at a higher rate. Try to fix a predetermined price for lease renewal, not a price based on the "fair market," when you sign your lease.
5. Rent Increases - Landlords often include annual rent increases in your lease terms. Try to negotiate no rent increase for the first year, but if the landlord will not allow that, at least negotiate a cap on the increase.
Group 7
ReplyDelete1. Understanding what is included in the rent costs per month. CAM, insurance, parking, security etc.
2. Changes in rent with renewal. Would there be an increase in CAM expenses throughout the term or with renewal.
3. Length of lease. Option to chose lease length.
4. Is adding on or updating possible? Additional rooms, change in layout of the office, parking lot.
5. Non compete claus with the landlord. Making sure other locations in the building aren't interrupting your business.
1.Landlord- make sure he/she is not inflexible or unreasonable during the lease because if they are then they might be later on if you needed repairs or improvements in parking or in the office.
ReplyDelete2.Lease-make sure the lease is renewable and how long the lease is for.
3.Rent/fees-see if there are caps on rent, if it increases every month/year, or if its possible to get other fees eliminated all together.
4.Office- make sure you know exactly what you are leasing for, if its the whole building or just a section of the building.
5.Expansion-See if the landlord pays for expansion build outs or if you have to.
1)Is the price fair for both parties. High monthly lease payments can be detrimental to new business owners if patient flow isnt what they expect. It would be a good idea to find a lease price that isnt too astronomical in case business is not what it is projected to be.
ReplyDelete2) Location: If one is located in an area where potential customers cannot take note, then it wouldn't make much sense to open up shop there. Are you leasing a small office area in a larger complex or an entire medical/ office building. Are you on the main drag or off the beaten path? THese are all things to consider.
3)Term: How long is the lease term? It is important to have a clear understanding between the renter and the land lord what the term of the agreement is. If business is not producing in the area that youve decided to set up in you know exactly when your lease agreement is up so you may plan in advance if any modifactions need to be made to your location.
4) Operating Expenses: It is not only important to know how much you will be forking out a month on rent, but also operating expenses. If you don't generate the funds to even operate your business good luck paying rent. If every months rent is going to clean you out, then you may want to think twice. Both of these are essential things to take into account when agreeing on a lease.
5)Competition: It would be nice to know if your competitor will also be leasing in or near the location you are looking at. It would not be very advantageous for you to be leasing space in the same building as other chiropractors unless there were some gross differences in the way each practices
1. What are the lease terms? Can the agreement be broken, if necessary? What benefits are given to signing longer leases?
ReplyDelete2. Can the tenant remodel or renovate the interior as needed for a chiropractic practice, including, but not limited to adding safety requirements for x-ray equipment to be in the office.
3. What insurance does the property include and what are the tenants responsible for?
4. What other businesses are in the building? This is important for knowing the overall atmosphere of the building and how a chiropractic office may (or may not) fit along side the other professions.
5. Is subleasing an option? This can be important if thinking about expanding or looking to have another chiropractor share space, which may be considered a sublease.
- The length of the lease: Maybe bargain for a short initial lease with option to renew. Option to renew should be for a couple of years in the beginning, then maybe increase the length of lease as the business grows. This could be more expensive.
ReplyDelete- Rent and rent increases. Could try to get a cap on amount of each years the increase will be. Gross lease: Utilities, repairs, taxes and insurance included?
May benefit to pay more rent and include all this, in the long run.
-Tenant improvements: If space needs lots of improvement it could be possible to have landlord to it for no cost- and sign a long term lease.
-Subleases and assignments; can be a good idea to have the opportunity to sublease.
- Location: What other businesses are there around you. What kind of potential patients are there? Has there been other chiropractic offices there, and how did they do?
Our group decided that the foremost important aspect in negotiating a lease would be to thoroughly read through the entire document to make sure there aren't any "hidden" aspects you may not agree with.
ReplyDelete1) What is the length of the lease and what happens if it needs to be broken for any reason?
2) Is there any maintence included within the lease and if so, what? Would it be the responsibility of the landlord or the D.C.?
3)If our business would need to expand or remodel in anyway would this be possible and if so, whose responsibility would it be?
4)If this is a building with other offices, what kind of businesses does it entail and how would a chiropractic office fit?
5) It may also be good to know what other kind of businesses have been in that space. This would be helpful to know how they did while they were there.
6) We'd also like to know costs and the chances of costs increasing throughout our term
1 - Price: is it something that will fit in your overhead budget. Is the rent subject to change?
ReplyDelete2 - What is the length of the lease is important and if, for some reason, you need to break it, will there be any penalties on your part. Can you find someone to sublet for you without any ramifications?
3 - If you need to modify rooms or add more on, is this a possibility. Is there a room that can accommodate an x-ray machine?
4 - What is the physical shape of the building and is parking a problem? When was it built?
5 - Who is renting around you or in your immediate area? Is it a high traffic area? Is there another chiropractor a few doors down? If it is a professional building, so the others in the building frown on chiropractic?
Price - The price of the lease agreement - Starting off in practice is already costly enough. Picking the "perfect" place starting up may be out of your price range. Have multiple other locations picked out with lease prices so that you may be able to use those as leverage to talk down the price of your favorite places
ReplyDeleteLength of lease - Starting a new practice is unpredictable. You might not want to get into a long term agreement (>3yrs). This is because of the possibility of business failure and the need to get out or because the practice is growing so much you need to expand.
Maintenance/Upkeep costs - What sort of things will the owner be taking care of and what do they expect you to pay for? (ex. plumbing,sewer,parking lot, building upkeep.)
Rent Increases - Property owners often make improvements to the property and in turn charge overall rent increases. Make sure you discuss these terms prior to signing.
Square Footage - First make sure the price is fair for the functional square footage. Layouts of buildings may not be as functional as you think just from looking at the number of square feet. Consider usable space and how that would work in office flow
length - landlords may provide different deals to different length of contract. You should consider what you need and what’s the best length you may get currently.
ReplyDeleteno competition - Make sure the business will have no competition from similar businesses occupying space in that building and it’s specifictly listed on the contract..
maintanence: check what the landlord or the tenant should be responsible. Also check if landlord charge separately for different items or it’s possible to have a fixed fee for certain costs. also know for sure if there is rent increase after landlord making improvement to the property.
check if renewal or adding new things is possible because it will be a chiropractic office.
location: make sure you know what ur lease is for. An entire building or a portion of it?