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Stipulations
While some provisions seem harmless during the negotiation period, many ambiguous terms may hold extremely unfavorable demands. Thus, read each stipulation clearly. Beware of:
Assignment Clauses - a lease may contain a provision with the following statement: "a change in more than X % of a company's stock ownership will be considered an assignment."A lease assignment, which is forbidden without a lessor's approval, can terminate the entire lease. This is clearly adverse and can be avoided if the lease is read scrupulously before signing.
Personal Lease Guarantees - guaranteeing personal assets, in addition to business resources/property, is highly unfavorable. This stipulation may seem minuscule initially, yet has the power to do significant damage.
CPI-Based Rent Increases - it is not uncommon that lessors demand annual increases based upon the percentage rise in the Consumer Price Index. Because the percentage augments may become unduly high, try to include a cap (maximum) percentage. Also, if possible, include a stipulation that prevents such an increase for the first few years.
Permitted Use Clause - restrictions on use of commercial property can hinder the lessee in numerous ways. Although ones ideas about the way space will be used are predetermined, business growth and other factors may demand change. Therefore, make the "permitted use" clause as broad and all-encompassing as possible.
Limitation on Improvements and Relocation Clause - a lessor, undoubtedly, creates a one-sided lease. The owner may place a limit on possible improvements a lessee can make and will include a "relocation" term. While a lessee cannot eliminate such provisions, he/she can limit them. For example, insist on improvements to a space under a certain sum to be acceptable without permission. Also, demand that if a relocation of property is underway, that all moving expenses will be paid for by the landlord. The new commercial property should be equivalently suitable.
 
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