For example, with the first business I had a two year lease with a five year option. Shortly before the seven years were up, my good landlord passed away and his widow attached herself to an attorney to take over. The widow and her attorney stalled the date for negotiating the new lease. I thought they needed the time to sort out estate matters. That was a mistake.

Two months before the lease was to expire, the attorney presented a lease with unreasonably high rent. He proceeded to explain how I had better accept the conditions. That trying to relocate in the short period before the lease was up would result in client loss, loss of yellow page advertising and everything else he could think of that was none of his business.

It would have been nice to just leave but it would not have been the best business solution. The lease was renewed and then I sold the business. Remember to negotiate a new lease far in advance so if you decide to move, you have plenty of time. If the building changes hands, other things may change as well, but the terms of the lease would not be affected.

Shopping around for an inexpensive rent is one of the most important things you can do. You do not want to be a slave to rent. Some rents increase according to the cost of living index. Make sure everything is in writing.

If you want to make some changes to the office space, make sure permission is written into the contract. This includes agreeing upon what type of signage you can have. You want people to discover you or at least be able to find you when looking for your office. With good signage and location, you can reduce your advertising budget considerably. See the chapter on advertising for more discussion on signage.

Every little thing you want to do to that property should be entered into the lease. You might get permission later on but don’t depend on it. This includes changing a faucet ….anything.

It may be an advantage if the lease has a mediation clause. This means that if there are any disputes about what the contract means or what someone does, both parties must sit down with a trained neutral mediator before either can sue. The mediator attempts to bring the two sides to an agreement both can live with. This is different from arbitration which is a more formal process and should be avoided by the small business owner. Arbitration comes up with a decision—one party wins, one party loses. Mediation attempts to carve a solution which makes both parties happy. Credit card companies and stock brokers specify arbitration, not meditation—do they see an advantage against the little guy by doing so?

When presented with a lease, do not sign it. Take it somewhere else and read it carefully before signing. In fact, if it is not a simple read, this might be a good time to hire an attorney for an hour and let him/her look over the lease or hire a lease negotiator to read and evaluate the agreement. There may have been some aspect you have overlooked. Once you do sign, keep a copy. Get a copy signed by the landlord. Make sure the language on both copies match.

Sometimes there are unfavorable leases. A lease may say you’re personally financially responsible for someone injuring themselves in the parking lot. This could be true even if the injured party was there to see another tenant and your insurance will not cover the situation. Or the lease might make you responsible for the property taxes. It might be better to walk away; however, there are lease negotiators who will negotiate a fair lease for a minimum fee.

For example, when I wanted to rent the current office, the lease that was presented was the worse possible. In fact, it included the clause mentioned above, where the tenant would be personally responsible if someone…anyone…. injured themselves on the property including the common areas. Also, if there were an earthquake or other natural disaster, the tenant would be responsible for any repairs. Unfortunately, at that time there was a real estate crunch and there was nothing else available that would comply with the local zoning requirements. However, for eighty dollars, a lease negotiator completely rewrote the lease, striking out whole paragraphs and adding our terms. The property owner agreed to it without reservation.

A friend leased an office that required her, along with the other tenants, to pay the owner’s property tax. The more units that were vacant, the fewer tenants there were to divide the tax bill among and the larger chunk of taxes each tenant had to pay. The owner was clever. He knew his tenants would spend a lot of time finding him other tenants to keep the suites filled, saving him the trouble and expense. This was in California where property tax has an annual ceiling.

Some states have high ceiling like 10% per year. Some states don’t have ceilings at all. Sometime a lessor will expect you to pay taxes based on a per unit charge, which makes more sense. However, you must still consider the amount taxes may rise.

Operating expenses are sometimes passed on to the tenants, as well. This would include trash pickup, grounds upkeep and other maintenance. I prefer to simply pay a flat rent than to take financial responsibility for unknowns. However, if you don’t care and it’s a great location, that may be enough. If you decide to pay a share of the operating expenses and/or property taxes, make sure there are well defined perimeters on these operating expenses and ceilings as well.

Generally leases for more than a year must be in writing to be enforceable. It is to your benefit to have your lease in writing. If the management says they won’t hold you to the lease, don’t believe it. It is a legal document. If the management says anything in a joking manner, believe it; it is not really a joke. Friends joke, this is business. For example, after reaching a fair price agreement during a negotiation on rent the manager suddenly said “That’s okay; I will just hike the rent up later to make it back…ha ha ha.” My gut told me he really meant it. He did not want to sign an option either. Of course, I walked away.

Problematic leases are not all that common and there are some really kind managers and property owners out there. Never get desperate; the right place is waiting for you.

Make sure all maintenance is in the lease agreement. You do not want to maintain old faulty appliances. Nor, for example, do you want to have to replace an air conditioner because it is 25 years old and fell apart. Once it is installed, you may not legally be able to remove it and take it with you when you leave. It could be considered a permanent fixture of the property. Even if there is a written agreement that allows you to do this, what use would you have for it? It may end up sitting in your garage for 6 years before you throw it out, investment and all. Keep these high expense responsibilities on the property owner. One possible exception is if the rent is so dirt cheap you’re sure to come out ahead, even if the whole place fell apart at once. In that case, figure how many treatments you have to do to replace everything to get a realistic view.

Make sure the property owner maintains financial responsibility for any health hazards associated with the unit, such as asbestos or faulty wiring. Ask to see an asbestos inspection certificate. Popcorn ceilings and vinyl 9 inch square floor tiles are signs of possible asbestos. The proper way to detect asbestos requires a certified asbestos inspector. If materials containing asbestos are disturbed or worn, you can inhale asbestos fiber. This is a huge consideration if you’re planning any renovation at all.

Negotiate to have the owner pay for partitioning, new carpet, paint and repair. They will likely do it as it is a tax deduction for them. Ask them to waive the first month’s rent or however long it takes to renovate. They most certainly should if they will be in charge of the work. Also, you can make the lease contingent upon licensing. In other words, the lease is only valid once you have obtained licensing and if you don’t, the lease is void.

My first business was opened with a partner. This was very helpful. Not only did we split the expenses but it was easier with a team of two going into unknown territory. It was in an old medical building. There were sinks in the rooms, which was nice, but had little else to offer. The location was close to the edge of nothing, near the beach but no foot traffic. The rent was too high for what it was; there were pipes extending out of the walls leading to nowhere. There were two entrances and clients had to be warned not use one of the walkways which was as slippery as ice when it rained. This was the first place we looked at but thought it was fine because we were both employed in a fairly worn out part of Long Beach at the time. We got assigned parking spaces but it didn’t matter because the parking lot was not visible from the suite. Parking was precious. A lot of business was lost because clients could not park their cars and it only got worse each year.

Be sure to spend plenty of time checking out places before you sign that lease. Had we done that, we would have found a better location, a nicer suite, and plenty of parking for less rent.