For any brick and mortar or service business you start, there’s no getting around having to sign a commercial lease unless you own or buy the property. And unless you know what you’re doing, there’s many pitalls that can come with commercial leases. If you sign the lease without throughly going over the terms, you can find yourself in big financial troubles later down the road.

Remember my posting about LV Eric? The multimillionaire that went from rags to riches? Before he made his fortune, he used to own 3 pet shops. When business went bad, he was on the hook for 3 commercial leases. He had to file bankruptcy and was flat broke.

Here’s some tips for signing a commercial lease:

1) Have an attorney look over EVERYTHING. Even if you think you understand the lease terms.

2) Make sure you know if you are allowed to sublease. This can be an “out” if business goes bad.

3) Understand who is responsible for what damage repairs and routine maintenance.

4) Watch out for lease increases and how much. Make sure there’s a cap or terms you will agree to. You don’t want your lease to double every year on a 5 year lease.

5) Watch out for 10 year leases. Some landlords try to lock you in for the long haul on these. Don’t sign these. If you do, make sure there’s several “outs”, be it subleasing or lease transfers. You don’t want to be locked in for 10 years.

5) Ask about first right of refusal. There’s a chance you may want to expand or move to a better location within the building or strip center.

6) Ask about options to renew. You don’t want to have to keep moving each time the lease it up.

That being said, commercial leases can be nasty and ruin you financially if you don’t know what you’re getting into. Lease negotiations are not easy and rarely go smoothly. There will be lots of back and fourth negotiations, so expect it and participate in it. Don’t just blindly sign any lease. Make sure you are protected and satisfied with the terms. Don’t worry if the landlord is not, that’s his problem, not yours.