Understanding Contract Review With a Business-Minded Approach
How do we do a better job at reviewing contracts?
We understand business better than most other lawyers. Our tax background helps us in understanding tax implications ranging from:
- Out-of-state transactions
- Property leases
- Employee benefits
…to name a few.
Why Would This Be Important?
If you are:
- Purchasing an existing business
- Getting a new job
- Simply needing to understand your contract
…we help you see the bigger picture.
One of our favorite clients was about to sign a 5-year lease on a commercial property.
He was floored at the price that he was getting – very cheap compared to surrounding properties.
However, he was unaware of the workings of a triple-net lease.
When he was told that a triple-net lease was a fancy way of saying that he would be liable for all of the taxes (amongst other things), he quickly realized that his fixed rent was not as fixed as he thought.
But How Much is Property Tax? Does it Go Up?
We pulled all of the documents from the Assessor’s office to determine:
- How much he would pay before the build-out
- How much he would pay after the build-out
His rent nearly went up 70% as a result of the taxes alone.
We haven’t even gotten to the clause about common area maintenance.
Long-Term Client Success
Our client has been with us ever since, and we’ve proudly been part of a business that has grown:
- From one small location
- To four locations
- With approximately 25 employees
Frequently Asked Questions
What is a business-minded approach to contract review?
A business-minded approach to contract review focuses not just on legal language but on understanding how contract terms affect real-world business outcomes. This includes evaluating tax implications, operational costs, and long-term financial impact.
Why is it important to understand tax clauses in a lease?
Tax clauses, especially in agreements like triple-net leases, can significantly increase your financial obligations. Without proper analysis, you may end up paying much more than expected in property taxes and common area maintenance.
How can contract review help when buying a business?
When purchasing a business, reviewing contracts helps identify hidden liabilities, understand employee benefit commitments, and evaluate lease terms. This can protect you from future financial surprises.
What should I look out for in a commercial lease?
Watch for lease structures such as triple-net, escalation clauses, and maintenance responsibilities. These can lead to higher costs than initially anticipated, especially after property improvements.
How can a lawyer with tax expertise benefit my contract review?
A lawyer with a tax background can foresee how contract terms will affect your tax obligations now and in the future, providing a more comprehensive risk assessment and saving you money in the long term.