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Since commercial tenants have specific needs and considerations distinguished from residential tenants, different laws apply to commercial tenants.
If you are renting commercial property, use our Commercial Lease Agreement to ensure you hit all the major points in your contract that apply to tenants doing business.
What is a Commercial Lease Agreement?
A commercial lease agreement includes terms and regulations tailored to commercial tenants, such as businesses renting an office, retail, or warehouse space.
You need a commercial lease agreement when leasing a commercial property like an office building, restaurant, retail store, kiosk, or warehouse.
A written document containing the essential terms of your lease is necessary because verbal agreements regarding land and real estate structures are usually not enforceable.
A commercial lease agreement will do the following:
- Protect your legal rights: A well-written commercial lease agreement will include terms for late fees for unpaid rent to protect you if tenants do not meet their obligations under a lease. It gives you leverage for potential settlements and simplifies a lawsuit against the tenant.
- Help ensure your relationship with the tenant is clear and well-defined: With a commercial lease agreement, you can avoid disputes about whose responsibility it is to maintain the property or to whom the building’s fixtures belong.
- Assis in rental income stability: A longer-term lease will help you avoid interruptions to regular rent payments or give you the grounds to sue for unpaid rent if the tenant leaves early.
When Do You Use a Commercial Lease Agreement?
You should find a commercial lease agreement before you start looking for a tenant for a commercial rental.
The legal document will help you think through the terms you would ideally prefer in any lease.
Once you have found a tenant who wants to lease your rental as part of a commercial venture, you should have tenants sign the lease agreement form before taking possession of the rental.
What to Include in a Commercial Lease Agreement Form
A commercial lease agreement should cover all the essential terms of the lease, including the following:
- Rent: You should include the rental amount, when rent is due, and how to make the monthly rent payment. You may also include penalties or fees for late rent payments.
- Description of the premises: You should include a specific description of the premises, and you may wish to state whether parking is extra or included in the rent.
- Taxes, insurance, and maintenance: A commercial lease agreement should clearly state whether the landlord or the tenant is responsible for paying property taxes and casualty and liability insurance. It should also confirm who is responsible for maintaining the property.
- Security deposit: The lease should state the required security deposit amount.
- Use: If you want the tenant to use the property only in a certain way, you should state that.
- Date of possession: A commercial lease agreement should include when the tenant takes possession of the rental, which is often different from the lease date.
- Termination date: You should include when the lease terminates, and what happens if the tenant stays after the lease period expires.
- Furnishings and fixtures: In most places, any trade fixtures, which are installed or fixed to a building used for a specific type of business, belong to the tenant, and any other fixtures that a tenant installs belong to the landlord. But your lease should specify this. A good lease will also state whether any furnishings or other types of personal property are part of the agreement.
How to Write a Commercial Lease Agreement
Follow the steps below to write a commercial lease agreement.
Step 1 – Enter State Name
Write the name of the state you are contracting in.
Step 2 – Fill in Effective Date
Specify the effective date of the agreement.
Step 3 – State Landlord and Tenant Details
Enter the name of the landlord and tenant, and note whether the tenant is an individual or an entity.
Step 4 – Identify Premises
Indicate the premises type and size, and note whether the use of the premises includes common areas, parking spaces, and storage fees.
Step 5 – Enter Lease Terms
Describe the start and end dates for the lease and whether or not the tenant can renew the lease.
Step 6 – Specify Rental Terms
State the rent amount, when rent is due, and the operating cost for the lease.
Step 7 – Choose Tax Option
Check whether the landlord or tenant will pay taxes on the premises and whether or not the rent includes taxes.
Step 8 – Note Past Due Payment Details
Write all details concerning past due payments, late fees, and returned payment fees.
Step 9 – Fill in Security Deposit Details
Write the amount of the security deposit and check whether or not the deposit shall accrue interest.
Step 10 – Write Holdover Details
Specify the number of times the base rent that is due immediately upon tenant holdover.
Step 11 – Describe Premises Use, Occupancy, and Condition Details
Enter information on how the tenant can use and occupy the property, and note how many days after move-in the tenant has to inspect the property and note defects.
Step 12 – Note Property in Demised Premises Information
Fill in details regarding leasehold improvements, fixtures and furnishings, and personal property taxes.
Step 13 – Describe Repairs and Maintenance Details
Note all details regarding the landlord’s and tenant’s obligation to repair and maintain and information regarding remodeling and liens.
Step 14 – Enter Insurance and Indemnification Information
Note requirements for tenant’s public liability and property damage insurance, and any insurance the landlord provides.
Step 15 – Discuss Signage
Indicate rules and requirements for exterior signs and other signs used on the premises.
Step 16 – Choose Utility Options
Specify the utilities the tenant and landlord will pay.
Step 17 – Enter Access, Surrender, and Assignment Details
Address all details concerning fixtures and equipment the tenant can install, as well as rules concerning assigning and subletting.
Step 18 – Enter Damage to Premises Information
This section discusses substantial and partial damage by the tenant to the premises.
Step 18 – Fill in Eminent Domain Details
Discuss what happens in a case of eminent domain.
Step 19 – Write Default Process
Note how many days the tenant and landlord have to cure a default.
Step 20 – Enter Miscellaneous Details
Choose the state law that governs the contract and note rules for dispute resolution.