What Your Business’ Rental Agreement Should Include

There’s a lot of you who are renting out rooms and bringing more massage therapists or other healthcare pros into your business on a rental basis. And while this is an awesome business move for a lot of people, there’s some logistics of this that need to be spelled out, that I see a lot of therapists just not set up at all. And I also see a lot of therapists who rent a space with no rental agreement. Everything is so often just verbal agreements or like a super simple singular paragraph “contract”, when in reality we’re talking about leasing a commercial space and you need to have a legally binding, legitimate lease agreement in place. So, I’m going to come at this from the point of view of a massage therapist renting out space to another professional, but by all means, if you’re the one who is going to be renting a space, you’ll also want to be sure this stuff is included in your own rental agreement when your landlord presents you with a contract.

 I’m going to straight up advise you to go get a lawyer to work one up for you, but I also know a whole of you aren’t going to do that, so I want to be sure you’ll have your bases covered if you’re going to try to DIY this kind of thing.

Contracts matter! I don’t care how well you think you know somebody, how much you like them, or how much you feel like you’re on the same page, contracts are vital. And anytime you enter any business arrangement, agreement, contract, relationship, whatever, communication and ensuring that both parties are on the exact same page from the get-go can greatly reduce headaches down the road. So get a contract and make it super specific and super clear.

Alright, let’s look at the key components to have in a lease agreement. Again, I advise you have a lawyer draw this sort of thing up for you and tailor it for your specific needs, but here’s the general breakdown of what’s included lease agreement, in no particular order or grouping…

Length of the Lease

If this is month to month, one-year, five-year, whatever your time parameters are, it needs to be spelled out very clearly here. And this section usually includes…

An option to renew

So at the end of that lease what is their option to renew. Is it 30 or 60 days before the end of the lease that you give option to renew, are you able to deny the option for renewal and the parameters around that, all that sort of stuff.

Cost

This includes what exact amount they are responsible for paying, what the due date is each month, who’s responsible for utilities, taxes, insurance, etc. All that stuff needs to be clearly spelled out in detail here. This also includes information about a security deposit; how much, when it’s due, what are the parameters for return of that deposit, etc. And this should include any potential rent changes or increases and the specifics around those; when those changes can happen, based on what, how often, how much, etc. And what’s done about non-payment; how is that resolved, what time frame do they have to make it up, when does it lead to termination of the contract and eviction, all that stuff.

Property Description

This might seem obvious and unnecessary, but it is in fact very necessary. So this will include the address, the location and exact size of the rental space – so this is really important if you’re renting a room within a facility; what exact area are they renting out and therefore can keep their stuff, decorate, have clients in, all that kind of stuff. Also, list out any common area usage, like a front desk, bathrooms, break rooms, laundry, that sort of stuff. Parking availability will be listed here too; if there’s limited spaces you may have parameters on that, areas where they and their clients can park, etc. Signs are also included in this usually; so what signs are available either on the building or at a sign post. And what are the specifics of that sign allowance; so sizing, certain companies that need to be used to make or hang the sign, all those things.

A Use Clause

This will describe what the space can be used for, any limits you have on that, as well as subletting information; so can they sublease the space or part of it, and any limits or requirements around that.

An Exclusivity Clause

This is where you may or may not want to grant exclusivity rights for that space; so this means that, let’s say, you’re bringing in an esthetician to your wellness center, that they are granted exclusivity rights meaning you will not rent out space to another esthetician in that center.

Repairs, Maintenance, and Improvements

This will outline who is responsible for what as well as what’s allowed to be handled by the tenant and what’s to be handled by the landlord. So when it comes to repairs of the space; things like washer and dryer, HVAC units, plumbing, electrical, all that stuff…who is going to be responsible for repairing it and what is the other party’s role in that.

This should also include how to contact to discuss these things, timeframe for decisions, you rights to come into the facility to do such…which includes what days and hours, the need to set up a preplanned appointment time for you to come, stuff like that – you know, you can’t just barge in whenever sort of thing.

This also includes who’s responsible for cleaning, any expectations around that, maintenance of certain equipment, necessary safety info, stuff like that. And you should also outline their rights to improve; so think can they paint the walls, is it only with an approved color, can they pick the color and you have a paint crew come do it so you know it’s done right, or whatever. What can they do and not do when it comes to making any improvements or changes to the space they’re renting.

Termination of Contract

So any parameters around how they get out of their lease, what is the basis for eviction, any costs associated with all this, and any other potential termination specifics.

So as you can see, there’s a lot of parts to a rental agreement, but they’re all really important. The more clear, specific, and upfront you can be when entering this sort of agreement with someone, the better it is for everyone. They know what’s expected of them, you know what’s expected of you, and if any issues arise, you can always refer back to the contract. It makes things much smoother, so don’t forego a real rental agreement.