As a business owner, there’s nothing more stressful than a poor relationship with your landlord. You can fire bad employees and clients whenever you want, but you can’t separate yourself as easily from the person who owns your workspace.
It’s critical, therefore, that you take every precaution you can to avoid getting into toxic rental situations. While you can’t see the future and some problems are inevitable, you can mitigate the risk by looking out for these warning signs. If any of these become apparent during your viewings or conversations with property owners/managers, you should find a new work environment.
The exterior and common areas look neglected
Even if the interior of your unit looks immaculate, you should look at the exterior of the building and any common areas, such as hallways, break rooms, bathrooms, lobbies, stairwells, etc.
A property manager or building owner may spruce up the interior because that’s what most people care about. But maintaining the exterior of the building is often costly and time consuming.
Even if your unit looks fine, you have to assume the lowest form of maintenance is what you’ll end up with. So if the lawn is unkempt, the parking lot is littered, and the lobby is a mess, assume your unit will end up in that condition one day and the owner won’t do anything about it.
This is a bigger problem if your business intends to bring clients to the office. Your clients will judge everything they see, even if it’s not technically your problem. A dirty bathroom will make your clients wonder what else you aren’t managing, even if that bathroom is community space.
“I’ll show you a similar unit”
Sometimes less-than-honest landlords will offer to show you a unit that “looks exactly like the one you’ll be renting.” They offer all types of excuses. They might say that it’s occupied and the tenant doesn’t give him permission to enter (which is nonsense because every landlord writes a walkthrough provision into the lease) or it’s under construction (again this is nonsense because it doesn’t prevent you from seeing it).
Never sign a rental agreement unless you have physically stood in the unit mentioned on the lease. We always tell our clients to arrange a full viewing of the unit and property they’ll be renting. If the landlord says he/she can’t show you something that you’ll be paying for, run away.
The owner doesn’t want to sign an agreement
People make a lot of mistakes regarding rental agreements. The biggest one you could make is not having one.
Property owners sometimes want to avoid leases for different reasons. Some want to avoid paying taxes on the income. In some cases, the space isn’t zoned for commercial use or the owner doesn’t have the right paperwork/licenses/certifications in place. In the worst cases, the owner is actively looking to take advantage of you.
Truthfully, this happens more often in residential renting than commercial office space, but it does happen. Even if the property owner offers you an attractive arrangement in exchange for untraceable cash payments, it’s still in your best interest to have an agreement.
Here are a few problems you could experience if you don’t have a rental agreement.
1. You could be evicted early.
Since there’s no official agreement, the property owner can have you removed at any time. In some states you can prove occupancy without a lease, but that takes time, stress, and money to fight. Experts at Real Estate Lawyers agree. They also suggest a common way un-leased renters can be evicted:
“It is better to rent commercial property with a lease agreement, given the possible liability associated with renting. For example, if someone does not have a lease and their property owner decides to sell the property where the business is located, there is no lease to prevent the new owners from giving notice that they would like you to vacate the property. Without a lease, the new owners would be able to tell you to find a new location for your business.”
2. You could lose any money you put into the unit.
Small businesses don’t usually incur a lot of expenses when moving into a unit, but there are some. For instance, you might buy office furniture that fits the space or maybe a yearly parking pass in a nearby garage. If you are suddenly evicted, you could lose those investments.
3. Your rent could suddenly increase.
If you don’t have a lease, there’s technically no legal rental price. The property owner can demand a bigger rent at any time and your only recourse is to move. Sometimes unscrupulous landlords will bait-and-switch you by letting you in without a lease and then requiring you to sign one at a higher rent.
4. The owner might not perform maintenance or repairs.
Lack of a rental agreement means the landlord isn’t legally liable for basic repairs (excluding repairs relating to health and safety, which they would have to handle even if the unit was empty). You’ll have to pay out of your pocket even for the simplest things, like new lightbulbs or worn carpeting.
Remember: A rental agreement should be in place as much to protect you as the property owner. If the landlord refuses, so should you.
The owner won’t answer questions
Naturally, you’ll have questions for the property owner or manager. Who will handle repairs? Who do you call if the building is locked? Who do you call if someone is parked in your spot? How are conflicts resolved between tenants?
In turnkey spaces, the tenant relies on the property owner for more services than they would in a traditional lease. The owner might pay for high-speed Internet, phone lines, a shared receptionist, or a hundred other things. As a potential tenant, you would have questions about all of this.
But if the landlord doesn’t have answers to your questions, they either aren’t taking the arrangement seriously, don’t know what they’re doing, or don’t intend to abide by any of the promises they’re making. Either scenario is bad for you.
A good landlord that wants to provide a quality space and build a long term relationship with you should be happy to answer your questions. It’s in their best interest. If you get vague responses or “don’t worry about it,” look elsewhere.
The owner is difficult to deal with
Even if there’s nothing wrong with the unit, you can get an impression of what renting will be like by having a simple conversation with the property owner (or whomever is your point-of-contact). Assess this person carefully. Are they pleased to have a new tenant? Are they proud of their building and business? Are they protective of their other tenants?
People are usually on their best behavior when they’re on first dates and job interviews. If the property owner is distant, distracted, dismissive, or doesn’t seem to have time for you, chances are that won’t change once you’ve signed an agreement. Don’t waste your time trying to work with someone who isn’t willing to invest into the relationship.
Whatever you do, don’t settle
There are likely more available office units available than you know. Most are off the main road without signage. You don’t have to settle on the first property you see. The property owner/manager might try to influence your decision with something like “There isn’t much else available in the area,” but that probably isn’t true.
Make sure you find the right space for your business. The success of your business and your team depends on it. We insist that our customers schedule multiple viewings so they can get a feel for what’s available and what they need. Find your next office today.