WHAT IS A COMMERCIAL LEASE AGREEMENT?

A Commercial Lease Agreement is a legally binding contract between an owner/landlord and a business. Since this type of agreement is not created to benefit the general public it is not subject to various consumer protection laws. Commercial leases are, however, subject to stringent laws that residential leases are not. For example requirements for sprinkler systems and access for handicapped individuals’ requirements. The duration of commercial leases is generally longer than residential leases and allow more flexibility for the tenants in matters of adjusting rental space for their specific business.

WHEN DO YOU NEED A COMMERCIAL LEASE AGREEMENT?

A Commercial Lease Agreement is needed when a business has a need to rent space in which to engage in its trade or profession. Businesses require commercial lease agreements in order to conduct their businesses and to provide services in areas that are not zoned for residential use only; they need to be able to secure space in areas of a city and or of a building that is specifically tailored for commercial use.

WHAT IS INCLUDED IN A COMMERCIAL LEASE AGREEMENT?

A commercial lease agreement should include the following:

• The names and contact information of the parties.

• The amount and the manner in which security deposits will be tendered.

• Explanation of subletting rights if applicable.

• Description of the property to be leased: square footage, number of rooms and bathrooms as well as exits and parking spaces etc.

• Duration of the lease period including information re renewal and termination of the lease.

• Guidelines and information for making alterations and improvements.

• Statement regarding rent increases (which are also called escalations) and any caps that may be imposed on rental increases.

• Statement regarding the display of advertising tools including signs and other marketing devices.

• A use clause that will prohibit the tenant from using the leased space for certain activities that may be deemed inappropriate for the commercial rental space.

• An exclusivity clause may be needed to prevent the owner from renting nearby space to one of the tenant’s business competitors.

• Information on the maintenance and repair of the rental space.