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 is due by Wednesday, April 25th.
Dr. Frost
Group 19
ReplyDeleteLeverage, negotiating, doing your homework, the ability to walk away and understanding the negotiation table, are the five top things people should understand when negotiating a lease. Leverage is important because the side, which has it, has the power in the business relationship. Leverage provides the ability to use tactics in order to get the most out of the deal for the least amount. Negotiating should be a combination of being “nice”/”speaking softly” to the other side but being hard on the negotiating process. Doing your homework means planning out your time so that you are not running against the clock. Not having enough time can back people into corners and except deals that are not in their favor. Also landlords tend to give better deals/larger concessions at the end of a lease negotiation. The ability to walk away from a deal can be beneficial because you are not agreeing to a bad deal but can also persuade the landlord into more concessions. Finally, when negotiating a lease you should understand the negotiation table. This means, listening to the landlord and other realtors and building relationships with your potential future landlord.
Jake T.
ReplyDeleteGroup21spring2012
1. Rent/Security Deposit
One of the more obvious topics would be negotiation of the monthly rent.
2. Time frame or length or the lease.
Although shorter leases are typically not as cost effective as say a 5-10 yr lease, for a new doctor opening a practice for the first time it may be beneficial to start was as short of a lease as possible just in case things go sour.
3. Lease start date
If any build-outs are necessary would the lease start prior or after completion of the needed improvements.
4. Responsibilities of tenant/ other costs/ charges
Any additional costs you may be responsible for ie snow removal/lawn care etc.
5. Zoning Laws
Before signing a lease, check with your city office about zoning ordinance, although a space may be available you should make sure your city/county will allow/ approve it for a chiropractic clinic.
Group 2
ReplyDelete1. Cost
Making sure there are fixed parameters for rent, deposit, utilities, and any fees are clearly outlined in the agreement.
2. Landlord services/Tenant responsibilities
Once again this relationship needs to be clearly defined and have contingency for almost any situation (Ex: a common source of dispute is responsibility for maintenance issues) as well as any items/equipment included with the building lease
3.Waiver of Claims
Each party should agree to recover losses to their property through their own insurance coverage. This protects the tenant from liability far in excess of the building's liability insurance limits in the event that the building is severely damaged or destroyed.
4. Timing
Start and end dates of the lease, terms for breaking the contract early.
5. Assignment and Subleasing
Determine the parameters in advance: allowance to sublease, agreement to not withhold or delay an approved sublet, etc
Group 16:
ReplyDelete1. Rent
The cost of renting space for a clinic is top priority when negotiating lease terms. How much is the security deposit? When will the rent be paid, monthly, quarterly, yearly? What building modifications are allowed without interfering with the security deposit? Will the cost of rent cover building maintenance(electrical,plumbing,structural issues), lawncare/snow removal, or will that be an outside expense covered by the renter? Are there discounts available such as a lower rent rate for a longer lease term?
2. Owner concerns
Does the building owner currently own the property or is the mortage still active? If there is an active mortage, which bank is the owner financing the building through? What would happen if the property was foreclosed upon while I am renting the property? If extraordinary circumstances arise, is there a plan in place that is agreed upon and fair to the property owner and renter outlined in the lease?
3. Lease terms
How long is the term of the lease? Are rent discounts available for a longer term? Would a short term or long term lease be most appropriate for a new chiropractic clinic in the chosen area. What is the penalty for ending the lease early/is there a specific period of time needed in the lease to still have the full security deposit returned? If a long term lease is agreed upon, will rent remain the same throughout the entire lease or is it negotiable?
4.Building modifications and zoning laws
Is the building zoned legally for a chiropractic clinic in the area? Is the building OSHA compliant (i.e. handicap accessible, wired correctly for a large outdoor sign, etc.) or will it need to be modified and at who's expense?
5. Insurance
The renter will obviously have insurance on all equipment and for any liabilities to visitors. Does the owner have an active insurance policy on the building and what are the terms of the policy? Is an additional policy needed by the renter for possible building issues? Is the owner's policy adequate? Should the renter contact the insurance company of the owner to discuss coverage and circumstances?
Group 8
ReplyDelete1. Rent
When is it going to be due? What is the amount? How long is the rate going to be agreed upon? Who is responsible for utilities or costs for improvement of the facility? Will you be able to get out of or extend the contract if the need arises?
2. Maintenance
Who is responsible for utilities or costs for improvement of the facility? Will the tenant or landlord be responsible for day to day cleaning and servicing and major improvements?
3. Liability
What type of insurance does the landlord want the tenant to have? What is required by your state/county/city? Who is responsible if someone gets hurt in the building due to renter liability vs. a building fault of the owner?
4. Insurance
What type of insurance does the landlord want the tenant to have? What is required by your state/county/city? Does your landlords insurance cover your assests if descruction of defacing of property occurs or do you need your own?
5. Zoning
Is the space zoned for buisiness and chiropractic? Are there special requirements to be meet if you have special services such as xray? Is the facility up to code and passing fire marshall inspection as well as OSHA?
Group 7:
ReplyDelete1. Cost
Make sure that all the costs of the buisness are clearly defined in the lease agreement. These costs incluse the security deposit, rent, building maintenance, and utilities.
2. Time frame of the lease
Knowing when the lease starts and ends is extremely important for anyone who is planning to lease. Included in this would be any reprecussions for terminating the lease early or any possible benefits for extending the lease.
3. Landlord Services Provided
Having clearly defined responsibilities of both the landlord and tenant is crucial in any lease agreement. Knowing each parties responsibilities and putting it in the lease agreement helps facilitate a healthy working relationship and can help avoid any future complications since each party will know what needs to be done when different situations arise.
4. Zoning Laws
Being familiar with the zoning laws in the city of your employ is extremely important especially before one enters in to any lease agreement. It's also good to know beforehand if the building you plan on renting meets OSHA standards or if modifications will have to be made.
5. Insurance
The person renting should have insurance on all of the equiptment they will be using and have liability insurance. Discussion of the insurance policies that the owner possesses and the terms of those policies is also very important to know before entering into a lease.
Group #20
ReplyDelete1.)Cost/Security deposit
Finding a lease that is with in your starting budget. Be sure costs, monthly payment schedule and security deposit are clearly indicated in the lease.
2.) Maintenance, Grounds keeping costs and utilities
Are these included in the lease or do you have to pay extra for them
3.) Length and Time Frame of Lease
Know the start and end dates of the lease. When you can move in and when you need to vacate the property.
4.)Insurance and Liability
What type of Insurance does the property owner want/require you to have. What does the policy cover and is it included in the lease or seperate.
5.)Renewal
What are the renewal terms and conditions. How soon before the lease ends do you need to submit intentions to renew. Is it a completely new contract or month-month
Group 12
ReplyDelete1) Rent
Reasonable price and comparable to other locations as well as having a lay out of which utility are covered.
2) build out
In the lease, it is important to have clause stating what work done on predetermined date. It will detail which things will be done such as wiring a room for 220v, how the rooms will be laid out and any other speciality needs for the work.
3)Building modification after initial build out
Determine the additional cost of modification after the initial build out.
4)Length of the lease
Make sure a length of time that you are willing to stay there.
5)Renewal
Discuss the renewal terms that figure out any increase in cost or how long do I have to renew.
Group 18
ReplyDelete1) Most important issue in negotiating the lease is the type of lease you will have. This could be anything from a net lease, double net lease, triple net lease a gross lease, etc. These will be including or excluding what the tenant pays for (rent, utilities, insurances) and what the landlord pays so it is important to get what is fair for both.
2) The term- It is important to have a term that is the right time for you. You would not want this too long so that if there was an unfavorable lease or something happens you are stuck in it for a long period of time.
3) Rent Rate - This should be appropriate with rent rates of surrounding businesses and other commercial leases.
4) Option for build out or expansion. If your business is growing and you need the option to expand this may be an important option for you.
5) Operating expenses - These could be put on the tenant and it is important the tenant is aware of them. These are non business related expenses like maintenance or janitorial services.
Group 11
ReplyDelete1. Rent/cost
This is the most important issue in negotiating lease. It is important to make sure that it is reasonable and affordable.
2. Terms
Length of the lease is very important to check. How often the owner need to renew it? Is the rent likely to increase in the future? Are there any discounts available? What is the penalty if the owner needs to end the lease early?
3. Tenant responsibilities
To maintain the building, what responsibilities the tenant has need to be checked.
4. Insurance
It is important to check the insurance policy on the building that the owner has. Is it active? What does it cover? Does the owner needs any additional policy?
5. Owners' personality/ relationship
When negotiating a lease, a renter should check if the owner is reliable.
Group 22
ReplyDelete1. Price - Price is an important factor when negotiating a lease. As in any business, you want to keep your overhead low in order to start generating a profit.
2. Length of the contract - Because you are starting out in a new area and not completely sure of the income possibilities even after thorough research, you do not want to be stuck in a long term contract in the event you wish to change locations.
3. Ability to terminate the lease - What are the contract opt out options? What must be done in order to get out of the lease if you are unhappy with the landlord or can no longer afford the cost of rent? What are your penalties for early termination?
4. Responsibilities - What are the responsibilities of the landlord to the building? What are the responsibilities to the tenant? Who is in charge of things such as trash upkeep, snow removal, and parking lot maintenance?
5. Other tenants - Who are the other tenants in the building? What are their businesses? Will the other businesses help or hinder your own business?
1. Cost-The cost has to fit your budget. Business owners want to keep overhead low. Cost will often be a determining factor when giving a final answer when negotiating a lease.
ReplyDelete2. Length of contract-It's important to make sure that you have the option to renew the lease after my one year is up, since my business will still be there.
3. Subordination clause-Discuss a subordination clause (says the mortgage is subordinate to my lease) and nondisturbance clause (says as long as I pay for my lease, it cannot be terminated). These will protect me if my leaser is in financial trouble and the bank ends up owning the building
4. Compitition-Negotiate a contract where there is no competition in a building next to me. Know what the neighboring businesses are.
subordination clause
5. Repairs-Discuss a decorating allowance if repairs are needed, so extra money to paint or recarpet as needed.
1. Price - above all other factors if you cannot afford the lease, all other negotiation factors do not matter. The price has to be within a reasonable range to allow you to build and grow your practice as desired.
ReplyDelete2. Length of lease contract - second only to price, the length of the contract has to be within reason. Even with the best contract of a lease, too long or too short of a contract will render the "best deal" worthless.
3. Services provided - throughout the length of the contract it is important to negotiate desired services such as snow removal, parking lot maintenance, exterior maintenance, etc. Having a contract that covers your desired services will allow you to focus on running the other affairs in your clinic.
4. Landlord relationship - a healthy landlord relationship is crucial to the lease process. Even with the best contract in place dealing with an unruly landlord will make life miserable. On the other hand a healthy trusting relationship with a landlord can avoid future headaches that may come up.
5. Fixed rate - During the length of your contract a fixed price is very important. Like many of us who have been "sucked in" by a promotional rate that suddenly switches to a higher rate, a lease without a fixed rate can create a similar bad situation.
Group 5
ReplyDelete1. Cost - It will be important for both parties to be on the same page for the cost of the space, and if rent will increase in the future, how much? And when?
2. Length of Lease - The length a landlord wants you to sign a lease for will vary. You want to be able to renew and also you don't want to be stuck in a long-term lease if it's not the right situation.
3. Maintenance of the Building - Whose responsibility is it? What are the landlord's responsibilities? What are the tenants responsibilities?
4. Landscaping/Snow Removal - Is this taken care of within the lease? Will this be an extra expense for the clinic?
5. Build-out/Expansion Option - Does the clinic have the option to expand when needed?
Group #6
ReplyDelete1. Rent. Make sure that the price of rent is locked in, and have in writing what will happen if rent prices are increased for any reason. Also, do not sign a lease for too long in case you want to leave sooner than you thought.
2. Improvements/Buildouts. The layout, cost, amount of space, and schedule of completion should all be agreed on in writing so there are no surprises.
3. Insurance. Different buildings cover different things so make sure that you have the proper type of insurance which will cover any accidents that could potentially arise.
4. Maintenance. It should be clearly laid out who is going to pay for what kinds of problems. This includes electrical, plumbing, and telephone wiring. There should also be an agreement for how quickly problems will be addressed.
5. Building services. Janitorial services, common area maintenance, and other services should be agreed on in written detail.
Group #4
ReplyDelete1. Tenent responsibilities-Is it your job to do/hire someone for landscaping, snow removal, repairs, etc.
2. Rent-Is the price locked in? And make sure that the lease isn't for too long a time.
3. Subleasing-Are you able to sublet an extra adjusting room? Do you need the landlord's approval first?
4. Other businesses-Who are the other tenants in the building? Will they help or hurt your business?
5. Room/Option for expansion- If you want to expand your practice with another room or two, is there space and is it available to you?
1. Price: Negotiating a reasonable price, especially with respect to the location of the office and the market trends, that will ultimately allow the business to grow and succeed has to come first. If the owner cannot afford the space, the space essentially has to be abandoned as the office of choice.
ReplyDelete2. Right of First Refusal: This gives the tenant the ability to purchase the building first if the landlord decides to sell the building during the life of the lease. This is important so that the business is not lost due to a third party offer to the landlord.
3. Fixed Rate: Having a fixed rate for the price of rent is important so that the business is not faced with unexpected and unbudgeted expenses.
4. Landlord/Tenant Maintenance Responsibilities: It is very important to get in writing exactly what the landlord versus tenant will pay for with respect to maintenance issues. If this is unknown and not in writing, the tenant may have unexpected expenses that are not in the budget.
5. Renewal: The renewal terms should be addressed and agreed upon before the initial lease is signed so that if the business chooses to continue after the initial lease, the business can plan accordingly. It is important to know if the contract will me month-to-month or another full year etc.
Group 15
ReplyDelete1. Rent: Tenat needs to understand price, lenght of lease, possibility for renewal. Also it is imoportant to understand terms of eviction or early withdrawal from the lease.
2. Build out: Business can easily grow rapidly in a chiropractic office, it is important as a tenant to discuss buid out options and what possible building modifications can be done in the lease space.
3. Maintenance: If/when something happens that needs to be fixed within the building, it is necessary for a tenant to know what they are and are not responsible for fixing/maintaining.
4. Subleasing: As a chiropractor we often want to rent space out to massage therapists, acupuncturist, and other chiropractors. Discussing this with the landlord needs to be addressed before ever signing a contract.
5. Insurance: It is important to know what coverage the landlord has taken out on the building. What insurance is the tenant responsible for, make sure you know.
Group 17
ReplyDelete1. Rent- The rent expected every month is the most important issue when negotiating a lease. The main things to negotiate after that include Tenant improvement deductions and automatic rent increases.
2. Term- The date of the lease to start is important. Whether it be the day the lease is signed, or when the tenant actually moves into the building.
3. Description of the Premises- The lease needs to accurately describe what the tenant is renting. This can be the entire building, which would be the buildings address. However, if only a portion of the building, there needs to be great detail of what all is being rented.
4. Security Deposit- There is no limit a landlord can ask from a tenant when it comes to security deposit. So it is important to negotiate a fair deposit amount.
5. Insurance- There are a lot of different insurance types for businesses. So having a minimum type of insurance agreed upon is very important. It may be smart to negotiate a leasehold insurance, which protects against a lease being cancelled beyond the tenant's control.
1.) Rent: If the price can not be afforded, then all other parts of the contract are null and void as this will not allow for proper budget to gain financial growth.
ReplyDelete2.)Length: Once the price has been agreed upon, the length of the contract will need to be determined. The length needs to reasonable, you do not want to be locked in long lease if you decide to move or the practice get too large and you need to expand. The option to renew needs to be available.
3.) Type of lease: The type of lease will determine the buyers responsibilities. A lease like a triple net lease will cause the tenant to pay taxes, utilities,insurance and repairs which will add to the cost of rent monthly.
4.)Stipulations of contract: Within the contract the tenant wants to have the right of first refusal, which allows the tenant the right to purchase the building, before all others, if the owner decides to sell. As well as the option to sublease. The tenant will want to know if they have to option to rent space to others of they are not using it.
5.) Waiver of Claims: The contract should state whether the tenant, the owner, or both will cover the damages of the property in the occurrence that the building is damaged or destroyed. It should also state how much will be covered by each party if and when said occurrence were to happen.
1. Rent: You need to be able to afford the price of the space or your practice will not stay open long. It also needs to be a competitive price, ensuring you are not spending more than you need to.
ReplyDelete2. Length of the Contract: If you are new to the area, you won't know if this is your ideal location until you've been there for some time. If the lease is too long and the area is not right for your practice, then you could be stuck somewhere you don't want to be.
3. Inclusions/Exclusions: It is important to know what you are responsible for maintaining or paying for out of pocket. This would include utilities, maintainance, repairs, etc.
4. Subordination/Non-disturbance clause: What happens if the building you're leasing gets foreclosed upon? Do you have to option to stay as long as you've paid your rent?
5. Insurance: It is important to know if you are responsible for having renters insurance or whether your office is covered under the buildings insurance.
Group #3
ReplyDelete1. Rent: Make sure you are able to afford the asking amount. Also need to be aware of what expenses may potentially be included with the cost of rent. Do research and be sure that you aren't getting "raked over" with the price.
2. Length of the Contract: Be sure the time frame is reasonable. While it may be appealing at first, there are many factors that play into the success and traffic of your practice, therefore, if it doesn't fulfill your needs, you don't want to be stuck there for too long.
3. Tenant Responsibities: Be sure that you know what you are responsible for maintaining or paying for out of pocket and how to go about getting problems taken care of. This would include utilities, maintainance, repairs, landscaping care, etc.
4. Subordination/Non-disturbance clause: Ideally, it would be nice to not have to worry about whether the building you are leasing is financially taken care of. Reality is, even though you may make all of your payments, the owner of the building could become financially unstable due to unforeseen circumstances. Know whether or not you can stay open and the lease termination policy in such cases.
5. Insurance: Leaseholders insurance may be negotiated. It is also important to understand who is responsible for having insurance of the building - you having renters insurance or whether your office is covered under the buildings insurance.