A commercial rental agreement, also known as a commercial lease, is a contract between an owner of commercial real-estate property and a business tenant. It defines the tenant's use of the property and details any specific negotiated requirements for either party. Unlike a residential lease, the commercial rental agreement is not preprinted on a standard form but needs to be written individually by the landlord for each tenant.
- Skill level:
Gather the relevant information about the property that you're going to lease, including its postal and legal address, the total number of square feet to be leased, the common areas available for tenant use, all utilities and any encumbrances on the property that may affect the tenant's business.
Consult with a real estate attorney about the latest local, state and federal protected classes of tenants' requirements. Ensure that your property meets the architectural mandates of the Americans with Disabilities Act (ADA).
Collect property blueprints, building entry-alarm codes and other relevant information that's needed by the tenant and combine them as addenda to be added to the commercial rental agreement.
Identify the property by U.S. postal address, as well as by county designators such as block, lot and so on. List yourself or your company as "Landlord," and the person or company leasing from you as "Tenant." Note your commercial property management company, if applicable, and list all appropriate contact information. If real estate brokers were employed to represent either side, identify them by brokerage name, address and telephone number.
Write out the terms of the lease. Include its beginning and end dates, the total amount of rent to be paid (written in numbers and text), the incremental payments to pay off the total rent and any other monies to be paid (these may include property insurance, utilities, rent escalations, percentage-of-tenant's-gross-income rent and maintenance costs).
Write, in numbers and in text, the security deposit amount. Indicate whether it will be deposited in an escrow account and whether interest will accrue. If interest accrues, you must legally note whether you'll retain it or pay it to the tenant at the end of the lease.
List any improvements that will be made for the tenant. Note all common areas that will be available for the tenant's use, including hallways, elevators and public rest rooms. Identify signage that the tenant may erect by size and location.
State that your lease will not discriminate against any local-, state- and federal-protected classes of tenants (you can write this in capital letters for emphasis). Indicate whether tenant-landlord disputes will be mediated or arbitrated instead of being litigated. Attach any addenda.
Writing the Commercial Rental Agreement
Tips and warnings
- Tenants under commercial rental agreements are not protected by the same consumer protection laws that tenants enjoy under residential leases. There are no legal caps on security deposits, for instance, nor are there any rules that protect a tenant's privacy. Consult a real estate attorney if you're in doubt about the legal status under a commercial rental agreement that you're about to sign.
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