For many small businesses in Lagos, Nairobi, or Accra, commercial rent is one of the heaviest cash flow burdens. Sharing an office space with another company seems like an easy way to cut overheads and preserve working capital.
However, signing a co-sharing agreement without proper vetting can expose your business to sudden eviction, operational disruption, and regulatory penalties. To protect your cash flow and operations, there are several critical factors you must check before sharing a workspace with another business.
Legal right to sublet and lease alignment
The most critical check is whether the primary tenant has the legal right to sublet. Under tenancy laws in many African jurisdictions, subletting without the landlord’s written consent is illegal and grounds for immediate eviction.
Ask to see the head lease between the landlord and your prospective partner. If the lease explicitly prohibits subletting, any agreement you sign with the tenant is void, and the landlord can evict you without notice.
You must also align the lease timelines. If your partner’s lease expires in six months, your tenancy is at risk unless there is a clear renewal clause or a direct agreement with the landlord.
Splitting the real cost of power and utilities
In markets with unreliable grid electricity, the cost of running diesel generators or solar backup systems often exceeds the base rent. You must clarify how these operational costs are divided.
A flat-rate split may seem simple, but it can lead to disputes if one business uses high-energy equipment or runs night shifts while the other operates standard hours.
Establish a clear formula in writing. Decide if utility bills, internet, waste management fees, and security costs will be split by headcount, square footage used, or actual consumption.
Regulatory and tax compliance
Your corporate address is tied to your legal identity. If you register the shared space as your official office with local corporate registry boards, ensure the building allows multiple registrations.
Local government authorities frequently visit commercial properties to collect tenement rates, business premises permits, and waste disposal levies.
Verify who is responsible for paying these statutory levies. If the primary tenant defaults, local officials may seal the entire premises, disrupting your business operations even if you have paid your share.
Data security and client confidentiality
Sharing physical space means sharing risks related to data security and professional confidentiality. If your business handles sensitive client data, an unpartitioned network can create massive compliance liabilities.
Check if the shared workspace has secure, separate internet networks. Sharing a single local area network (LAN) with another business exposes your digital files and communications to unauthorized access.
Physical security is equally important. Ensure there are lockable storage spaces for physical documents and designated quiet areas where your team can hold confidential client meetings without being overheard.
Before moving in, draft a comprehensive service-level agreement (SLA) that details utility splits, dispute resolution, and exit clauses. Having a legal professional review this document is cheaper than resolving an office eviction dispute in court.
