Leasing space for your business is about much more than location, location, location. The fine details of the lease can often have an effect on the success of your business, so it is important to ensure that you have considered them fully before you sign on the dotted line.

It is crucial that you look into the future, and consider what your property needs might be going forward. If your business does well, you may need to expand, which will have an effect on the space that your business requires. Alternatively, if the business does poorly, you may need to cut back your space requirements. Other factors to consider are:

¦ The length of time you plan to operate your business and whether you will sell it or perhaps transfer it to your children.

¦ Whether the lease allows you to transfer or sublet the premises freely to responsible third parties in order to accommodate a sale or transfer to your children.

¦ Whether you plan (for example) to operate for the next three years from the premises and then move to a location more suitable for your business, and/or customer base; in which case you may want to consider a lease with an initial three-year term and with the option to extend if necessary for, say, three more years.

¦ Whether the lease stipulates that the rent will be reviewed during the period of the lease. If that is the case, you will need to consider the terms for rent review. The rent could be increased by an amount equal to an increase in the Consumer Price Index; alternatively, the rent could be increased to the level of the open market. An open market rent review will depend on the availability or non-availability of similar property in Bermuda. These factors will determine how large or small the increase in rent will be.

In addition to paying the basic rent, other immediate financial obligations will be payment for:

¦ Services (often referred to as the "service charge") such as building maintenance and security.

¦ The cost of utilities and taxes.

¦ The cost of insuring the building in which your premises are situated.

You will need to check how much the additional obligations will cost, and find out exactly what the service charge covers. You should also consider the current state of the premises you propose to rent and the building the premises are situated in. Depending on the period of your lease it may be unfair for the service charge to include, say, the cost of a new roof or new lift for the building – but you may have to pay for lesser repairs either directly or through the service charge. These factors must be budgeted for in your business plan.

Ideally, the lease should limit tenant liability to the annual rent, utilities, and taxes during the period of occupation, and you should try to get the service charge capped or limited to a fixed amount each month.

Check carefully what the landlord is obligated to insure against and do make sure that you see a copy of the policy schedule and a receipt for the insurance premium. The landlord's insurance will most likely only cover the building, but not your furniture, machines, stock, or your public liability. You will need to insure your own items and your public liability under your own separate insurance policy.

You could end up paying for uninsured damage to the premises or building by way of your immediate responsibility for the premises or through the service charge. Small changes to the wording in the lease can reduce your liability.

Most tenants presume that, if the premises are returned at the end of the lease in the same condition as at the start of the lease, they have met their obligations. However, the lease may provide that the premises have to be kept, and returned, in good and substantial condition and be freshly decorated. If the premises are in less than good and substantial condition and not freshly decorated when the tenant leaves, the tenant could receive an unexpected bill from the landlord.

Remember, if you do not pay money due under the lease, the landlord can apply to the court for an order for eviction. Without premises, you may have no business, no income, and no security for the future.

If you cannot get a lease that covers all of your requirements, make sure that you know the risk factors, so that you can budget accordingly. Alternatively, look for a better deal elsewhere.

In all cases, you will need to read and fully understand your lease, and even if you think you understand it, you would be well advised to get an attorney's advice. Advice now may save money later.

Attorney Neil Molyneux is a member of the Property Practice Group of Appleby. A copy of this column is available on the firm's web site at www.applebyglobal.com.

This column should not be used as a substitute for professional legal advice. Before proceeding with any matters discussed here, persons are advised to consult with a lawyer.