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Commercial Lease Forms and Agreements
Locate state specific forms for all types of commerical leases. Have confidence that our forms are drafted by attorneys and we offer a 100% money back guarantee.
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Why Your Business Needs the Right Lease Form
A commercial lease for your business is an essential tool to prevent future disputes with a building owner / landlord / mall owner. By clarifying the agreements and terms and conditions between the parties, there is much less chance of a misunderstanding that can lead to future litigation. When looking at commercial properties for sale or an office for rent, the commercial rental lease is a key part of the commercial lease property transaction.
Differences Between Commercial Leases and Residential Leases
There are important differences between a commercial lease agreement and a residential one. For example:
- There's more money at stake, as rents typically are higher due to the size of the space for lease, such as with a warehouse for rent, and a larger security deposit is usually at stake.
- There are fewer legal protections for the tenant of commercial space, compared with those under residential landlord-tenant law.
- Commercial lease properties involve more alterations, signs fixtures, and improvements to the leased premises. A lease clause dealing with maintenance and ownership should be included.
- Competing business considerations that may need to be negotiated in a lease clause during commercial leasing.
- A commercial property lease is often for a longer lease term than residential real estate.
- Retail space in a shopping center may be subject to local laws and ordinances.
Types of Commercial Leases:
- A Gross Lease includes insurance, property taxes, and maintenance costs in a flat rate monthly rent.
- Net Lease for Whole Building - This is also referred to as a known as a triple net lease or NNN lease because the tenant pays all three items, insurance, property taxes, and maintenance, and is responsible for operating the commercial real estate.
- Net Lease for Part of Building - In this net lease, the tenant pays only a part of the operating expenses for the space for lease.
Items Needed in a Lease for Commercial Space
- The addresses and names of the landlord/tenant, as well as the addresses and names of occupants or small business at the rental premises.
- Rent - The rental agreement should be specific about the term of lease and how much and when rent payments are due and rights and terms and conditions regarding late
- Utilities rights and obligations regarding payments need to be explained, especially in a commercial net lease.
- Access by the landlord - the property manager or rental office representative must be allowed access in an emergency and for necessary repairs. The tenant of the commercial buildings for rent must allow entry upon giving proper written notice.
- Property tax and property maintenance rights and obligations should be detailed in the office rental lease.
- Disclosures -depending on the state, a disclosure may be required for things like lead paint, asbestos, housing discrimination, etc.
- Insurance - who is responsible to carry insurance and who will make the payments to insure the location should be covered.
- Pet terms and conditions and any fees and/or written permission from landlord required.
- Security deposit -there are statutory restrictions and limits on security deposits on commercial lease space in some states.
- Parking if applicable, the total amount of the tenant's expense for parking, including any extra charges, plus any parking rules or regulations.
- Assignments and Sublets- written notice and written consent by the landlord if subletting or assigning the lease may be permitted for the lease on the site.
- Rental property management rules and regulations for an office space lease. Legal terms related to how handle any future legal disputes.
- Abandonment, renewal, termination and other required landlord tenant notices - terms should clearly state how to terminate this agreement. There are restrictions on automatic renewal clauses under the local statutes of some states.
- Warranties regarding compliance with the Americans with Disabilities Act and zoning compliance for the business to be conducted in the commercial property for lease.
The protections for the parties to a commercial lease agreement are governed more by contract law than landlord-tenant statutes. Therefore, combined with the length of a real estate commercial lease, the tenant's expenses, and the potential for a dispute to impact business profit, it's vital to use the proper lease for your business.
How is a commercial lease different from a residential lease?
Some of the main differences between a residential lease and a commercial lease agreement include the following:
- Because of the larger space for lease, there is more money required to be invested due to a higher monthly rent, security deposit, and longer lease term involved.
- Commercial space tenants aren't covered under the consumer protection provisions of the state's residential landlord-tenant law. For example, the written notice requirements for eviction don't apply to commercial leases. Therefore, diligence in preparing a proper commercial rental lease form is even more critical.
- Because of the remodeling, signs, fixtures, and improvements to the leased premises, commercial lease properties need a lease clause dealing with maintenance and ownership of such fixtures and improvements.
- Commercial leasing may require a lease clause dealing with renting to competing businesses on the leased premises.
- A commercial property lease is often for a longer rental term than residential property leases.
- Retail space for lease in a shopping center may be governed by restrictions on hours, parking, etc., under local laws and ordinances. A guarantee that business operations will be allowed under local zoning may be included in a commercial lease agreement.
What is a triple net lease?
A triple net lease, also called a NNN lease, is one in which the tenant is responsible for paying insurance, property taxes, and maintenance of the commercial real estate. The tenant becomes the operator of the building. It is also possible for the tenant to sign a net lease for only part of the building, and pay only a part of one or more of the three main expenses-property taxes, insurance, and maintenance.
A net lease is in contrast to a gross lease, where insurance, property taxes, and maintenance costs of a commercial property for lease are included in a flat rate monthly rent. Modified gross rent agreements are also available, when a tenant may not wish to pay for certain items, such as utilities or janitor services.
Who needs to sign the lease for commercial real estate?
When signing a lease for your business, there only needs to be two parties involved, the landlord / lessor and the tenant / lessee. If you are looking for an office for lease for a small business, it is possible for the tenant to sign the office lease in his/her capacity as agent of the corporation.
Can I assign a lease to someone else?
Whether you can assign a commercial rental lease will be a matter of negotiation between the tenant and commercial landlord and be determined by the terms in the lease clauses. Typically, the assignee of the leased premises will be bound by any lease clause in the original lease agreement, but it's possible to negotiate changes with the commercial rental property manager.
Will I need to pay the rent on the remaining lease if I end it early?
The answer will depend on the lease terms in the commercial property lease regarding early termination. Generally, if you don't get the landlord's consent to terminate the lease early, you are still responsible to pay the rent for the remaining lease term. However, the commercial landlord does have a duty to try to find a new renter, so the new tenant's rent would be deducted from any unpaid rent you owe under the full lease terms.
Who pays for the space in common areas, such as hallways?
In a commercial rental space, the common area like elevators and hallways are covered in the rent under common area maintenance CAM fees, which are part of operating expenses, and built into the monthly rent. Typically, the common area space n commercial lease property is divided among the commercial leasing tenants so that each pays a proportionate share.
What is a load factor?
It's the lessee's pro rata share of the common area expenses in a real estate commercial lease. It's built into the total monthly rent for commercial lease properties. For example, in commercial leases for office space, if ten percent of the buildings for rent are common area like hallways and restrooms, the load factor would be ten percent.
