Commercial Lease Agreement Template

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A commercial lease agreement is a contract specifically used to rent commercial spaces to businesses. Typically, a commercial lease form agreement contains more terms, conditions, and responsibilities for the landlord and the tenant compared to a residential lease agreement. Create your commercial lease agreement online on Lawrina and get a professional PDF document in minutes.
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A commercial lease agreement is essential for landlords and tenants leasing commercial property. Through this template description, you will understand everything you need to know about a commercial lease agreement, including their different types and key terms. 

An example of a commercial lease agreement on Lawrina is a preformatted document that outlines the terms and conditions of a commercial lease. It is a starting point for landlords and tenants, creating a legally binding agreement tailored to their needs.

What Is a Commercial Lease Agreement?

A corporate lease agreement is a legally binding contract between a landlord (property owner) and a tenant (business owner) that outlines the terms and conditions for renting a commercial property. These basic commercial lease agreements are typically for office spaces, retail stores, warehouses, and other commercial buildings. They are crucial for ensuring both parties understand their rights and responsibilities during the lease term. 

Parties of the Commercial Lease Agreement

  1. The landlord is the property owner who leases the commercial space to the tenant. They are responsible for maintaining the property and ensuring it meets local building and safety codes.
  2. The tenant is the operating business owner renting the commercial space from the landlord. The tenant is responsible for paying rent and sometimes utilities (depending on the terms of the lease) which must clearly be stated in a professional lease agreement.

Key Terms

The following are standard commercial lease agreement provisions that are essential for landlords and tenants. They must be properly represented on the commercial lease contract sample:

  1. Security deposit: This is the sum of money the tenant pays to the landlord to ensure that the lease terms are observed and upheld;
  2. Taxes: The landlord and tenant divides the property taxes;
  3. Insurance: Both the landlord and the tenant must have insurance;
  4. Rent: The amount the tenants pay the landlord for using the commercial property based on mutual agreement by both parties;
  5. Maintenance and repairs: Both the landlord and tenant are responsible for the proper maintenance of the property.

What Are the Different Types of Commercial Leases?

These are the three common types of month-to-month commercial lease agreements that can be used to draft a typical lease agreement template:

Gross Lease

The tenant pays a fixed rent sum in a gross lease, and the landlord is liable for all property-related costs such as property taxes, insurance, and upkeep. Tenants choose this lease because they don't have to worry about fees beyond the agreed-upon rent. This type of free office lease agreement is suitable for tenants who prefer predictable rental costs.

Net Lease

The tenant pays a base rent and a percentage of the property's operational expenditures, such as taxes, insurance, and maintenance, under a net lease. This type of printable tenant lease agreement typically specifies the actual expenses the tenant is responsible for.

Triple Net Lease

A triple net lease, sometimes known as a NNN lease, is a type of net lease in which the tenant is responsible for paying the base rent and all running expenditures for the property, such as property taxes, insurance, and maintenance. This type of free commercial lease agreement is more advantageous for landlords because it shifts most of the financial risk and responsibility to the tenant.

What Are the Types of Lease Terms for Commercial Properties?

In making a lease for free and using a commercial lease agreement template, there are two primary types of lease terms for commercial properties: fixed-term and periodic. Having a proper understanding of these types will help you choose the right commercial lease agreement that suits your needs. 

Fixed Term

A fixed-term lease has a specific start and end date, typically one to several years. This type of lease provides both the landlord and tenant with stability and predictability, as the lease terms remain unchanged for the agreed-upon duration. However, it may be less flexible for the tenant if their business needs change during the lease term.

Periodic

A periodic lease, known as a month-to-month lease, has no specific end date and can be terminated by either the landlord or tenant with proper notice, usually 30 days. This type of lease offers greater flexibility for both parties, allowing them to adjust the terms or end the lease as their needs change. However, it may also result in less stability, as no long-term commitment exists.

What Properties Are Commercial?

Commercial properties are spaces used for business, such as offices, retail stores, warehouses, restaurants, and other commercial buildings. Business owners who need a physical location to operate or store their inventory lease these properties.

What To Include in a Commercial Lease Agreement

A well-drafted commercial lease agreement template should cover various aspects to protect the landlord and tenant. Using a free commercial lease agreement can help you save on legal costs. Some key components to include are:

  1. The names and contact information of both parties;

  2. A description of the property being leased;

  3. The lease term and any renewal options;

  4. Rent amount and payment schedule;

  5. Security deposit details;

  6. Responsibilities for maintenance, repairs, and property improvements;

  7. Insurance requirements;

  8. Tax allocation;

  9. Rules and regulations for property use; and

  10. Termination and default provisions.

How To Write a Commercial Lease Agreement?

To write a comprehensive commercial lease agreement template, follow these steps:

1. Write the Effective Date

When drafting a commercial lease agreement template, start by stating the effective date of the lease agreement. It is when the lease terms begin and become legally binding for both parties.

2. Fill in Landlord and Tenant Information

Include the landlord and tenant's full names, addresses, and contact information. This information is crucial for identifying the parties involved in the lease agreement.

3. Identify Premises

Describe the commercial property being leased, including its address, square footage, and any unique features or amenities. This information helps to clarify the property's boundaries and characteristics.

4. Describe Lease Terms

Outline the lease term, including the start and end dates or the renewal options for a periodic lease. This section should also specify any penalties or fees associated with early termination or failure to renew. Using a free commercial lease agreement by Lawrina can help streamline the leasing procedures.

5. Note Rental Terms

Specify the rent amount, payment schedule, and any late fees or penalties associated with missed or late payments. This section should also include details about rent increases, if applicable.

6. Choose Tax Option

Indicate how property taxes will be allocated between the landlord and tenant. Sometimes, the tenant may be responsible for paying some or all property taxes.

7. Discuss Past Due Payments

Include provisions for handling past due payments, such as grace periods, late fees, and the landlord's right to terminate the lease for nonpayment.

8. Note Security Deposit

Specify the security deposit amount and the conditions under which it may be withheld or returned to the tenant.

9. Enter Holdover Details

Outline the terms for handling a holdover situation in which the tenant continues to occupy the property after the lease term has ended. This section should detail any additional fees or penalties associated with holdover and the landlord's right to evict the tenant if necessary.

10. Describe Use, Occupancy, and Condition of Premises

Clearly define the permitted use of the property, any restrictions on occupancy, and the condition in which the tenant is expected to maintain the premises. This section may also include any required property improvements or alterations.

11. Indicate Property in Demised Premises

List any fixtures, equipment, or other property in the leased space, and clarify the ownership and maintenance responsibilities.

12. Enter Repairs and Maintenance Details

Describe the responsibilities of both parties for repairs and maintenance, including routine tasks, emergencies, and the process for requesting and approving repairs.

13. Discuss Insurance and Indemnification

Outline the insurance requirements for both the landlord and tenant and include indemnification clauses to protect both parties from liability for damages or injuries related to the leased property.

14. Address Signage

Provide guidelines for any signage the tenant may install on the property, including size, location, and approval requirements.

15. Choose Utility Services

Specify which utility services the tenant is responsible for and any restrictions or requirements related to their use.

16. Document Access, Surrender, and Assignment

Describe the terms for granting access to the property, the process for surrendering the property at the end of the lease term, and any restrictions on the tenant's ability to assign or sublease the property.

17. Discuss Damage to Premises

Detail the responsibilities of both parties in the event of damage to the property, including who is responsible for repairs and how insurance proceeds will be allocated.

18. Enter Eminent Domain Details

Explain the rights and responsibilities of both parties if the property becomes subject to eminent domain, which is the government's power to take private property for public use.

19. Fill in Default Information

Outline the events that constitute a default under the lease and the remedies available to the non-defaulting party, such as termination, damages, or specific performance.

Write Miscellaneous Details

Include any additional provisions or clauses relevant to the lease, such as dispute resolution methods, governing law, and entire agreement clauses.

Do I Need a Commercial Lease Agreement?

When leasing commercial property, a commercial lease agreement is essential for both landlords and tenants. You can maximize the use of a commercial lease agreement template for an easier workflow and legal protection of both parties.

Common Use Cases

A commercial lease agreement template helps to:

  • Protect both parties' legal rights and interests;
  • Clearly define the terms and conditions of the lease;
  • Provide a legally enforceable document in case of disputes; and
  • Establish a clear understanding of responsibilities and expectations.

When Not To Use the Commercial Lease Agreement

A commercial lease agreement is optional when the property is used for residential purposes or when a short-term, informal arrangement is sufficient for both parties. All of these are put into consideration in the commercial lease agreement template.

Laws & Regulations

Residential leases are often highly regulated with some terms that cannot be changed by law even if both parties agree to waive those terms. But commercial leases have virtually no restrictions beyond basic contract law, except the Americans with Disabilities Act (ADA) which requires business spaces open to the public and accessible to those with disabilities. The law requirements depend on the size of the business, the type of business, and the age of the building or the time since it was last renovated. Tenants have primary responsibility for ensuring their business is ADA-compliant. However, they may wish to negotiate for a lease that requires the landlord to make ADA upgrades or to maintain ADA compliance, such as continued elevator access.

Warning

A commercial lessee generally has no rights other than what is explicitly stated in the lease agreement and cannot use local housing laws and consumer protections to help protect its rights.

Moreover, some states have their requirements for commercial lease provisions. For instance, Ohio requires that your commercial lease of three or more years not only be signed but must be notarized in order to be valid. 

In California, the landlord must return the deposit no later than 30 days after the landlord receives possession of the premises (Cal. Civ. Code § 1950.7(c)). In Idaho, it’s 21 days after the tenant surrenders the premises or up to 30 days by prior agreement (Idaho Code § 6-321).

In Louisiana, the landlord must return the deposit within one month after the lease terminates (La. R.S. 9:3251(A)). This requirement does not apply if the tenant abandons the premises either without required notice or before the lease terminates (La. R.S. 9:3251(C)).

In South Dakota, the landlord must return the deposit within 60 days after the tenancy terminates and the landlord receives the tenant’s mailing address or delivery instructions (SDCL 43-32-24.1).

In Texas, the landlord must return the deposit within 60 days after the date the tenant surrenders the premises and provides notice to the landlord or the landlord’s agent of the tenant’s forwarding address (Tex. Prop. Code Ann. § 93.005(a) and 93.009(a)). 

In New York, a commercial landlord must hold a tenant’s security deposit in trust on behalf of the tenant and may not commingle the security deposit with the landlord’s personal funds or make the deposit an asset of the landlord (N.Y. Gen. Oblig. Law § 7-103(1)). If the landlord chooses to place the deposit in a bank, it must be a bank with a place of business in New York (N.Y. Gen. Oblig. Law § 7-103(2)).

Therefore, consulting with a knowledgeable US attorney is essential to ensure compliance with local laws and regulations.

Also Read

Frequently Asked Questions

Do I need to get a commercial lease agreement? What happens if I don't?

You must get a commercial lease agreement template to avoid potential legal issues.

Does a commercial lease have to be in writing?

While oral agreements may be legally binding in some cases, having a written commercial lease agreement template is highly recommended. A written commercial lease agreement template clearly records the terms and conditions and is easier to enforce in court if disputes arise.

How to terminate a commercial lease?

Terminating a commercial lease agreement typically involves providing written notice to the other party, as the commercial lease agreement template specifies. However, the termination process and notice requirements may vary depending on the lease terms and the applicable state laws. All of these must be properly captured on the commercial lease agreement template. Therefore, it's essential to consult the lease agreement and seek legal advice.

Does ADA apply to commercial leases?

The Americans with Disabilities Act (ADA) does apply to commercial leases. Both landlords and tenants may have responsibilities under the ADA to ensure that the leased property is accessible to individuals with disabilities. It's essential to consult the lease agreement and relevant laws to determine each party's obligations.

How to send a commercial lease agreement?

A commercial lease agreement template can be sent to the other party via email, postal mail, or a secure document-sharing platform. Ensure both parties have a signed copy of the commercial lease agreement template for their records.