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What does a commercial lease contain?

A commercial lease is a legally binding document that outlines the terms and conditions under which a business can rent and occupy a commercial property. The specific contents of a commercial lease can vary depending on the landlord, the tenant, and the nature of the commercial space being leased, but it typically includes the following key elements:

Parties Involved: The lease will identify the landlord (lessor) and the tenant (lessee) and provide their contact information.

Property Description: A detailed description of the commercial property, including its location, size, and any specific details about the space being leased, such as unit number or floor.

Lease Term: The lease will specify the start and end dates of the lease term, as well as any renewal options and termination conditions.

Rent and Rent Increases: The lease will outline the amount of rent to be paid, the frequency of payments (e.g., monthly, quarterly), and the due date. It may also include provisions for rent increases, how they are calculated, and how much notice is required before implementing them.

Security Deposit: The lease will specify the amount of the security deposit required and the conditions under which it may be withheld or returned to the tenant.

Common Areas and Maintenance: It may detail the tenant’s responsibilities for common area maintenance (CAM charges) and any other costs associated with the property, such as property taxes or insurance.

Permitted Use: The lease will outline the specific purposes for which the commercial space can be used, and any restrictions on use.

Improvements and Alterations: This section may specify whether the tenant is allowed to make improvements or alterations to the space, and if so, the process and permissions required.

Repairs and Maintenance: The responsibilities for maintaining and repairing the property will be defined, including who is responsible for what, such as HVAC systems, plumbing, or structural repairs.

Insurance: The lease may require the tenant to maintain specific insurance coverage, such as liability insurance, and stipulate the landlord’s insurance responsibilities.

Utilities and Services: This section will outline which utilities and services are included in the rent and which are the tenant’s responsibility.

Assignment and Subletting: It will specify whether the tenant is allowed to sublease the space or assign the lease to another party, and the conditions and permissions for doing so.

Default and Remedies: The lease will describe what constitutes a default, the notice required for a default, and the remedies available to the landlord in case of default.

Termination and Renewal: The process for terminating the lease, including notice periods, and any options for lease renewal will be outlined.

Legal Provisions: The lease may include legal provisions, such as dispute resolution methods, governing law, and any special clauses or conditions.

Signatures: The lease must be signed and dated by both parties to make it legally binding.

Keep in mind that commercial leases can be highly customised, and the specific terms can vary greatly based on negotiations between the landlord and tenant. It’s important for both parties to thoroughly review and understand the lease before signing it, and consider seeking legal advice if needed to ensure their interests are protected. Here at MSR, we have expert solicitors who can draft and advise on your commercial lease. We have helped hundreds of our client successfully assigning their lease or drafting a new lease for their tenants. Contact us here.

*This article is not legal advice but provides a general overview. The specific details of your case will determine the best course of action.