What should be included in a commercial lease?

A commercial lease is a detailed document that outlines the terms and conditions of a rental agreement between a landlord and a tenant for commercial property. Here are the essential elements that should be included in a commercial lease:

1. Parties Involved

  • Landlord Information: Name, address, and contact details.
  • Tenant Information: Name, address, and contact details.

2. Property Description

  • Premises: Detailed description of the rental property including address and any specific areas or spaces included.
  • Use of Premises: Purpose for which the tenant can use the property (e.g., retail, office, restaurant).

3. Lease Term

  • Duration: Start and end dates of the lease.
  • Renewal Options: Terms for renewing the lease, including notice period and any changes in terms.

4. Rent

  • Base Rent: Amount of rent, frequency of payment (monthly, quarterly), and payment due date.
  • Additional Rent: Details on any additional charges (e.g., maintenance, utilities, property taxes).
  • Rent Increases: Schedule of rent increases, if any, and the method of calculation (e.g., percentage increase, CPI adjustments).

5. Security Deposit

  • Amount: Amount of the security deposit required.
  • Conditions for Return: Conditions under which the deposit will be returned or withheld.

6. Maintenance and Repairs

  • Landlord’s Responsibilities: Maintenance and repairs the landlord is responsible for.
  • Tenant’s Responsibilities: Maintenance and repairs the tenant is responsible for.

7. Improvements and Modifications

  • Approval Process: Process for obtaining landlord approval for improvements or modifications.
  • Ownership of Improvements: Who retains ownership of improvements at the end of the lease term.

8. Insurance

  • Tenant’s Insurance: Types and amounts of insurance the tenant must maintain.
  • Landlord’s Insurance: Insurance the landlord will maintain.

9. Taxes and Operating Expenses

  • Property Taxes: Responsibility for payment of property taxes.
  • Operating Expenses: Details on how operating expenses (common area maintenance, utilities) will be allocated.

10. Subleasing and Assignment

  • Sublease Terms: Conditions under which the tenant can sublease the premises.
  • Assignment Terms: Conditions under which the tenant can assign the lease to another party.

11. Default and Termination

  • Events of Default: Conditions that constitute a default under the lease.
  • Remedies for Default: Landlord’s and tenant’s remedies in case of default.
  • Termination Clauses: Conditions under which the lease can be terminated early.

12. Dispute Resolution

  • Arbitration or Mediation: Processes for resolving disputes.
  • Jurisdiction: Governing law and jurisdiction for legal disputes.

13. Miscellaneous Clauses

  • Signage: Rules regarding signage on the premises.
  • Parking: Allocation and use of parking spaces.
  • Access and Hours of Operation: Terms regarding tenant access and operating hours.
  • Force Majeure: Provisions for events beyond control (natural disasters, etc.).

14. Signatures

  • Execution: Signatures of both parties along with dates to validate the lease agreement.

Including these elements ensures that the commercial lease is comprehensive, clearly defines the expectations of both parties, and helps prevent potential disputes. Contact us for more professional commercial lease advice.

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