This is the second part discussing the pitfalls of standard leases. The first part dealt with residential leases, and this part will discuss commercial leases. As an attorney and summary process mediator handling evictions, I have been witness to commercial lease issues. Many of these disputes can be avoided by following four easy tips.
1. Clear business names
The first part of any lease is the names of the parties involved. As most landlords want a personal guarantee, this means the correct names of the commercial tenants are needed. Before writing the lease, ask for a copy of the prospective tenants’ drivers’ licenses along with current home addresses, cellphone numbers and email addresses.
If the tenants have formed a business entity, then you should also ask for a certificate of incorporation. This is either free from the state or requires a small fee to be paid by the tenant.
This verifies that the people who are signing the lease are who they say they are.
2. Fast money
Hopefully, the commercial tenancy is a wonderful experience with a long-lasting tenant who has a successful business. However, what happens if the tenant is unable to pay. Most standard leases state something like, “when the tenancy is completed, then the landlord can be reimbursed.” What does that mean?
Let’s say that you have a 5 year lease with ABC Corp. Two years into the lease, ABC Corp stops paying you. You want the remaining money due on the lease-right? Well, you have to wait until the lease expires, which is another 3 years to be able to collect your rent.
To fix that issue you near an acceleration clause that in effect says that when the contract is breached due to nonpayment, then the whole lease becomes due immediately. No waiting.
3. Additionally
Even in the standard lease there is a section titled INSURANCE where it is the tenant’s responsibility to get insurance. The landlord fills in the amount they require. First, there needs to be follow up. An insurance binder or proof of insurance needs to be held by the landlord, however, even better is for the landlord to be named as an Additional Insured.
When a landlord is named as Additional Insured, the landlord will be contacted when there is a change in the policy and if the tenant stops paying the insurance. Therefore if there is a loss, then there are no surprises. The landlord knows who the insurance company is and can make a claim.
Also, in regards to insurance, make sure your tenants are getting the right kind of insurance. For example, if there are storefront windows, then glass coverage should be a requirement.
4. Utilize the business
It is amazing how few landlords know anything about the businesses that are using their spaces. It should not be a surprise what the tenants do in the space you have rented to them. You should be a customer of their businesses and recommend them when you can. For example, if you rent to a restaurant, then be a patron of that restaurant. You should also pay full price. Why? They pay you full rent, and you want their business to be a successful. (Though I am fine with free dessert.)
There is also a marketing opportunity you may be missing by not promoting a business that you rent to. Many commercial landlords have websites, and on these websites my suggestion is that you add logos of the businesses that rent from you. (You need the tenants to send you the logos and give permission.) What a great way for you to get attention to your commercial property, while helping your tenant succeed!
These four tips will help you have a business relationship with your tenants along with decreasing your issues.
I am committed to Alternative Dispute Resolution as a way to solve business issues, especially mediation. For those unfamiliar with Alternative Dispute Resolution, or ADR and want to know more about it so that you can use it in your business, then I have created a course with Udemy (an academy of you). The first 50 people receive $10 off, that is half price, but it is only for a limited time so take advantage NOW to learn about using the processes negotiation, mediation and arbitration in an hour. Use code 10OFFADR at UDEMY. The class is also listed on the Business Program page.
If you are a landlord or property investor, then take the time to check out Investors Beat, a new online magazine filled with tips. I have recently contributed an article, 4 Tips To Avoiding Tenant Issues.
I missed a month of writing my blog. Clients needed my attention, and I was unable to carve out the time to make the blog a priority. Was this a mistake? Yes. What is the impact of this? I lost opportunities to gain more clients, to sell books and videos. Have you done this when it comes to your business?
In working with my clients we form contracts that spell out what I will do for them. This is called the scope. What happens when this scope gets changed or added to? My client is being served, but am I being served by allowing what in project management is called creep?
When you are working with a client and focusing on your business make sure that you are staying within the scope so that you have time for your business. Your clients will also appreciate that you explain what you are doing for them, and then reviewing if they have additional needs.
Remember your clients are your priority, but so is your business. Stick to your scope and your business activities, and do not allow creep to skew your results.
Many companies because of their size are able to bring to their employees different opportunities ranging from health and wellness initiatives to financial planning assistance. You may even be jealous when you hear your friend talk about their employer sponsored Zumba class or free insurance analysis program. If you are a small company or even solo entrepreneur, then you can feel that you do not have the ability to have any sort of program because you are just too small.
However, it is a matter of leverage. For example, my office is located on a floor with 5 other small businesses with at maximum three employees. We often would see each other in the hallway, but rarely understood each other’s businesses or even knew the other person’s name.
Yet, now we have started to leverage our small business status and take advantage of bringing in speakers, giving referrals, and being friendly. It is a win/win situation. If you work from home, then you can do the same with others that work from home, too.
Think about joining forces and bringing in people who can help your businesses improve. It is cost effective, a good learning environment and spurs creativity. True North Business Consulting offers classes that can be brought to your work situation. Having a small business doesn’t mean you have to think small. You can leverage and be like a large company, and have the potential for success too.
Welcome to the New Year! As a lawyer how I work is to help businesses resolve disputes with mediation and training. I love what I do because I see my clients save relationships, time and money. Still confused on how conflict resolution works with a trained legal professional?
I can give you an example, especially in light of the upcoming Supreme Court case that will decide about the federal health insurance mandate. Have you ever gotten a medical bill and then contacted the hospital only to get no answers? Or worse, a surly attitude?
Latest statistics say that 60% of bankruptcies are caused by medical billing. What is more unfortunate is that a majority of people that are going through bankruptcy due to medical bills have health insurance. There has to be a better way, and dispute resolution can provide that better way.
Hospital staff can be trained in the collaborative negotiation style which stresses win/win. The billing staff should always be the first connection and step with the consumer.
If that is not sufficient, then utilizing a mediator like Kaiser Permanente of California uses for quality control, but instead for billing. Mediators are trained neutrals who can facilitate decision making between parties, making sure they hear each other and come up with reality based solutions.
Imagine avoiding collection agencies, their hard tactics, and coming up with a practical solution that is based on good customer service.
You may think- this can only benefit large corporations and hospitals. That is not the case at all. This type of training and step by step process of resolution is good customer is affordable to all. You can have a program that fits your needs. In a time where reviews are so important- you want to make sure that you are doing what you can to retain your clients and have a positive company. Contact True North Business Consulting today for more information on our training program and mediation services.
Step By Step
I met with my cousin’s husband before Thanksgiving. It was not to go over holiday planning, like who was bringing what dish, but about government contracts. They have been successful in getting government contracts for their business, and I was investigating this for True North Business Consulting, LLC.
I learned about GSA, The General Services Administration is the central location for contracts- if you are interested in federal government contracts then you need to register with the GSA. Our discussion though was focused on the intensive request for proposals (RFP) that needs to be completed. This is the advice I want to share.
The government looks for processes-explainable steps that will bring results. And what the government looks for is what is usually wanted in the private sector, too. For example, True North Business Consulting offers mediation services. I would describe it as a five step process:
1. Speak to each side to get a sense of the issue and see what times they are available to meet.
2. Schedule a meeting(s)
3. Meet individually , if necessary
4. Come to an agreement
5. Create contract with review by outside counsel
My challenge to you is to think of your business as a process. What steps do you take with your service? Can you explain them and write them down?
The holidays are a great time to take a look at your business and focus on what system you are using.
True North Business Consulting was featured in this article
Stronger revenue results, more effective business relationships and clearer competitive differentiation are named as top issues of entrepreneurs, independent professionals and small business owners. Do those issues resonate with you?
Both women and men entrepreneurs are welcome at this special Business Development Event.
Business owners and entrepreneurs who attend will learn tools and systems needed to give new life to your business – or to build on your current success. If you are just starting a business, you will learn a direction and structure for growth.
All who attend will benefit from this informative, inspirational workshop and our business networking. In addition, we are launching Strategic Connection Groups for better business contacts in the following areas and markets:
* Architecture, construction, design and related fields.
* Catering, Restaurants, Food and related products and services.
* M2W – “Marketing to Women” with sub-groups in professional services and products and personal services and products.
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The featured speaker has the magic touch for recharging your batteries, building momentum and helping you stay focused on the results that matter most. Shelly Berman-Rubera is an award-winning entrepreneur, small business coach and President of SBR – Small Business Results. Shelly is a Certified Small Business Coach, Emotional Intelligence Leader, Lifestyle Management Consultant and Founder of four businesses.
Pre-registration is required, and the fee is only $25.00. Discounts available for companies sending four or more employees (email or call for details)
Information and Registration
Please forward this invitation to others who share your goal for better business results and stronger business connections.
I know you get a LOT of email – thank you for your attention to this invitation.
Please contact me with any questions or if you have difficulty registering. I look forward to seeing you on May 17.
Warm Regards,
Marie Warner
Warner Networking Events
marie.warner@warnernetworking.com
(617)721-4650
If you bring someone into your business, give them the hours and times they will work and direct what they will do, then they are an employee. It should be a simple definition, yet many people are called independent contractors when they are really employees.
An example:
The simplest example of an independent contractor is the following: You are an acupuncturist, and you need electrical work done so you hire an electrician to do some work for you. As the acupuncturists you do not have the same skills as an electrician, you do not tell the electrician how to put in a new outlet.
The electrician charges you for the work he has performed when he has finished it using his tools.
You are probably asking- if it is so simple then why the confusion?
I believe it is due to taxes, a fear of unemployment and payroll taxes. Although I am not an accountant I am telling you there is nothing to fear. First, an employee is an expense and you can write off the payroll taxes as a business expense. Secondly, there are payroll services that can setup your payroll automatically, if you do not want to take the bookkeeping steps yourself.
So if you in the same line of work, control what the person does, give them tools, then you have hired an employee, not an independent contractor.
What’s there to gain?
Plenty! You will be complying with the law. I am aware that the IRS will make a determination if you do not know if you are an employee or independent contractor. However, the IRS is only used when a problem has arisen, for example an employee was marked as an independent contractor and now wants to collect unemployment.
But more than that – you will have someone who you can assign work to, those jobs that you do not have the time or skill for, like marketing or administrative work.
You will also be improving your profession by providing jobs in the that profession to show that it can lead to gainful employment.
If you want more information on this matter or sublease agreements then please contact TrueNorth Business Consulting.
