What you need to consider when concluding a commercial lease agreement

A commercial lease agreement differs significantly in some respects from a private residential tenancy agreement. If you would like to rent a site and its premises for your car wash, you must therefore pay attention to some special features. You can find out what these are here.

No fixed rent for commercial lease agreements

In contrast to houses and apartments, there is no representative list of rents for leases of commercial purposes that the landlord has to adhere to. Accordingly, the prices can be freely negotiated here. Naturally, they are usually higher than the rents for residential property.

What type of rents are suitable?

In most cases, the most pleasant option for the tenant is the fixed-price rent, where a fixed monthly rent is agreed, which you pay. However, some landlords do not accept this. They can also request a stepped or index-linked rent. A lease contract with stepped rent provides for a slight increase in the rent at regular intervals, which is also stated in the contract. In the case of the index-linked rent, on the other hand, the contract states that the rent rises in line with the cost of living.

You can also agree a turnover-related rent in the commercial lease agreement. This is made up of a lower basic rent and a percentage of the turnover you generate with your car wash. That means the more you earn, the more you pay. Conversely, it also means that you will pay less rent if business is not going so well.

What must always be stated in the lease agreement

Some points must always be stated in the commercial lease agreement. For example, who is the tenant? This can be you as a natural person, but also the company, if you have founded a GmbH or an AG.

It is also important to provide a detailed description of the rental property with all the rooms or buildings belonging to it. Also the equipment, the insulation and the air conditioning should be described comprehensibly. It is also stipulated here whether you may advertise your company on the outside walls and whether there are parking spaces for your customers.

The next important point is the exact purpose for which you are renting the property, including all the conversions, extensions and upgrades required. This is followed by the amount of the rent including the agreed type (stepped, index-linked, turnover or fixed-price rent). You should also be sure to agree a rental period.

The appropriate timeframe depends entirely on your situation. If you are sure that your business will be a success at this location and that you want to operate it in the long term, you should negotiate as long a period as possible and insist that the option of renewal be included in the contract. However, you are then also bound by the agreed term and cannot simply leave the contract if the business is going badly.

The trouble with an open-ended commercial lease agreement is that the landlord can terminate it at any time without serious reasons. If you are served notice to quit by the 3rd working day at the beginning of a quarter, you will have to leave the rented premises at the end of the next quarter – in the worst case you will only have six months to wind up your business.

A competition-safeguarding agreement is possible

When you open your car wash, you naturally don't want a competitor in the neighbourhood to open a car wash as well. If your landlord owns more than the site on which you operate your car wash in the area, you can be assured by contract that they will not rent a site with commercial premises to anyone from the same sector in the same neighbourhood.

The level of operating costs should be appropriate

In a car wash you will use much more water and produce waste water than in an office building. Make sure that this aspect is taken into account in the operating costs. With higher advance payments, you will avoid any nasty surprises during the first settlement.

Summary: Take care when concluding a commercial lease agreement!

You do not have to have the commercial lease agreement certified by a notary. However, it's best to go through the contract with your solicitor. The legal scope for rent and terms is large and much can be freely negotiated. So it is better to have everything professionally checked before putting your signature on a contract that is not compatible with your planned business.