Small Business

Tuesday, February 07, 2012

Top 3 Real Estate Tips for Small Businesses

Top 3 Real Estate Tips for Small Businesses

For the vast majority of small businesses, the company’s first and only real estate transaction is entering into a lease for commercial space. Whether you are considering office, manufacturing or retail space, the following three tips will help you navigate the negotiation process so you can avoid any unpleasant surprises or costly mistakes.

“Base Rent” is Not the Only Rent You Will Pay
Most prospective tenants focus their negotiation efforts on the “base rent,” the fixed monthly amount you will pay under the lease agreement. You may have negotiated a terrific deal on the base rent, but the transaction may not be the best value once other charges are factored in. For example, the majority of commercial lease agreements are “triple net,” meaning that the tenant also must pay for insurance, taxes and other operating expenses. When negotiating “triple net,” ensure you aren’t being charged for expenses that do not benefit your space, and that you are paying an amount that is in proportion to the space you utilize in the building. Another provision to watch for is “percentage rent,” in which a tenant pays a percentage of revenue in excess of a specific amount. This may not be a bad thing, as it provides the landlord with an incentive to help ensure your company is successful.

There’s No Such Thing as a “Form Lease”
Most commercial property owners and managers offer prospective tenants a pre-printed lease containing your name and various terms. They often present these documents and adamantly explain that it is the landlord’s “typical form lease.” This, however, does not mean you cannot negotiate. Review every provision in the agreement, bearing in mind that all terms are open for discussion and negotiation. Pay particular attention to the specific needs of your business that are not addressed in the “form lease.”

Note the Notice Requirements
Your lease agreement may contain many provisions that require you to send notification to the landlord under various circumstances. For example, if you wish to renew or terminate your lease at the end of the term, you will likely owe a notice to the landlord to that effect, and it may be due much earlier than you think – sometimes up to a year or more. Prepare a summary of the key notice requirements contained in your lease agreement, along with the due dates, and add key dates to your calendar to ensure you comply with all notice requirements and do not forfeit any rights under your lease agreement.
 

Saturday, August 14, 2010

Bad Facts Make for Bad Law

The Florida Supreme Court recently issued an opinion in the Olmstead case that does not bode well for small business owners in Florida.  The result in the case was appropriate based on the circumstances – a couple of small business owners scammed thousands of consumers out of millions of dollars. But the rule of law that emerges means that single member owners of limited liability companies are now exposed to the claims of creditors, whereas they were not so exposed prior to this ruling.

Our firm has for years recommended the “single-member LLC” as a preferred vehicle for small business owners because of the many benefits afforded by this form of entity.  However, the Olmstead decision now casts a dark shadow on this choice of entity.  Fortunately, there are alternatives available with proper planning. If you or someone you know has a single member (or even a few member) Florida limited liability company, we recommend that you contact us for an appointment to discuss alternatives, or contact another experienced practitioner in this area of the law.

FURTHER READING ON THIS TOPIC:

The Olmstead opinion

Tampa Tribune article