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May 20

Written by: GCP Broker
5/20/2009 7:33 AM 

The next section your will encounter in the lease doument will most likely be titled "Term".  This is the length of time that makes up your lease, or the amount of time that you have agreed to rent the described space.

Generally, commercial leases run anywhere from 3 to 5 years but can range from as short as 1 month to as long as several decades.  The term you desire will be dependent on the present condition of your business and your future projections. Most leaes in this section will also outline a basic renewal plan, " tenant may renew once for an additional 5 years", which may or may not include a method for calculating a rental rate during the renewal period. In any situation, the initial described periond will be called the "primary term" and the renewal periods will be called the "secondary terms"(you may also see primary period or seconday period). This would be the proper languauge to use when discussing your lease with the landlord, "I noticed that in the third year of the primary term my base rent rose by 15%, why?"

Lease terms may start at any time of the month or year you would like; so pick dates that coincide with an advantageous time of your year.  Calendar year and fiscal years are the most commonly used time frames used in commercial leases.  A calendar year is just a 12month period starting in January and end ing in December. A fiscal year is any 12month period that works best for the accounting needs of your business; April to March, October to Septeember.  So find a term that works for you.

Make sure you understand the term of your lease as this will be the length of your agreement and a main schedule for adjustments of rents and expenses.

 

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