Create a Commercial Lease Agreement in PDF format with our easy-to-use template. Safely rent out a property for office, industrial, or retail purposes that meet all legal requirements.
Last Update May 15th, 2023
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- What Is a Commercial Lease Agreement
- Commercial Lease Clauses
- Sample of a Commercial Lease Agreement
- Commercial Lease Agreement by State
- What Should Be Included in a Commercial Lease Agreement
- How to Write a Commercial Lease Agreement
- Other Real Estate Documents
- Commercial Lease Agreement FAQs
What Is a Commercial Lease Agreement
A Commercial Lease Agreement form is a legal contract that sets the terms and conditions for a landlord and tenant to rent out a space for business use.
There are other names for a Commercial Lease Agreement, such as:
Business Lease Agreement
Commercial Property Lease Agreement
Lease Agreement for Commercial Property
Office Lease Agreement
The legal document covers terms similar to a residential lease agreement, such as rent and maintenance.
However, it also goes over how the tenant will pay common area maintenance, insurance as well as real estate taxes that are specific to commercial leases.
Use our printable Commercial Lease Agreement template to create your mistake-free document in minutes.
Types of Commercial Lease Agreements
There are a few types of Commercial Lease Agreements. Each type is related to the base rent and operating costs that the tenant has to pay.
Familiarize yourself with the different types of Commercial Lease Agreements:
Net: In this type of agreement the tenant must pay property taxes and insurance, in addition to standard area maintenance since operating costs are not part of the rental rate.
Modified Gross: Both you and the tenant agree on and share the operating costs.
Percentage: The base rent and monthly percentage of gross income from the business that is located in the property are paid to the landlord.
Full Service: The rental rate covers all property operating expenses, such as utilities, maintenance, and real estate taxes. You may also insert provisions giving them the right to transfer any future hikes in operating expenses to the tenant.
Commercial Lease Clauses
When creating a simple Commercial Lease Agreement, it’s necessary to include certain clauses in the contract. Without these clauses, you risk your contract being considered invalid or illegal in certain circumstances.
The clauses include:
Americans with Disabilities Act (42 U.S. Code §12183): Commercial tenants that offer “public accommodation” or have a workforce of 15 or more are obligated by the Americans with Disabilities Act (ADA) to follow all handicap access guidelines. The only exception to this rule is for properties that were not constructed or renovated after 1992.
Hazard Waste (42 U.S. Code § 6901): This clause obligates the tenant to add their signature stating that they will comply with all federal, state, and local regulations regarding the disposal of hazardous waste.
Your commercial tenants are required to follow EPA and ADA compliance when operating a business. For that reason, they must be included in your contract.
Sample of a Commercial Lease Agreement
To understand what’s included in this legal document, we have included a sample Commercial Lease Agreement below.
Review the example to know how to structure your contract correctly.
Commercial Lease Agreement by State
Each state has governing laws that set out requirements for creating and enforcing a Commercial Lease Agreement.
Reference your state’s law in the table below.
|Kentucky||§1.010 — 3.275|
|North Carolina||§ 25-2A-101|
What Should Be Included in a Commercial Lease Agreement
To create a detailed agreement, it’s critical to have all the essential terms of a Commercial Lease Agreement in place.
This includes information related to each party and the terms and responsibilities of the landlord and tenant.
The following details should be added to your Commercial Lease Agreement:
The property’s details
The permitted use of the rental property
The personal information of each party
The lease terms, such as the lease type, length, and start and end date
Whether the tenant can assign or sublease the property
The rent details, including the amount, payment frequency, and whether the tenant’s lease will be gross, net, or triple net
The responsibility for utilities and insurance payments
Security deposit information
Information regarding improvements to the property
Additional fees or expenses
Insurance requirements for the property
Each party’s signature
By including all of this information you’ll have a secure and legally valid document.
How to Write a Commercial Lease Agreement
As a landlord or even as a tenant looking to lease a commercial property, it's important to have a well-drafted Commercial Lease Agreement.
This legally binding document must carefully set out the terms and conditions of the lease, outlining the rights and obligations of both parties.
Here's a step-by-step guide on how to write a Commercial Lease Agreement:
Identify the parties: Start by clearly identifying the parties involved in the lease agreement. This should include the landlord's name and address, as well as the tenant's name and address.
Describe the property: Describe the commercial property being leased, including its address, square footage, and any other relevant details.
Define the lease term: Include the start and end dates of the agreement. Be sure to also include any options for renewal or extension.
Set the rent and security deposit: Outline the rent amount, how often it's due, and any late fees or penalties for non-payment. Also, specify the amount of the security deposit required and how it will be returned at the end of the lease.
Include any additional fees: Ensure that any additional expenses are added, if there are any, such as property taxes or maintenance costs.
Specify permitted uses: State the allowed uses for the commercial property, including any restrictions on use, such as zoning laws or noise regulations.
Outline tenant improvements: If the tenant is allowed to make improvements to the property, be sure to outline the specific requirements and who will be responsible for the costs.
Mention insurance requirements: Define the insurance obligations for the property, including liability and property insurance, and who is responsible for paying the premiums.
Outline maintenance responsibilities: Clearly outline the maintenance responsibilities for both the landlord and tenant, including those responsible for repairs, upkeep, and cleaning.
Include any termination clauses: Mention any termination clauses, including conditions for early termination or default, and what happens to the security deposit in these scenarios.
Sign and date the agreement: Make sure to have both parties sign and date the Commercial Lease Agreement, and provide copies to each party.
Use our Commercial Lease Agreement template to guarantee that none of these steps are left out without having to pay excessive legal fees.
Other Real Estate Documents
Whether you are a tenant or a landlord it’s a great idea to know about other legal documents that you can use related to a lease.
These similar documents are indispensable if you are a landlord:
You can find and easily download these documents for free on LawDistrict.
Commercial Lease Agreement FAQs
To familiarize yourself a bit more with how a Commercial Lease Agreement works and what to include, we have responded to some of the most frequently asked questions regarding the document.
Review the answers to the following frequently asked questions below for a better understanding of the legal document.
How to Terminate a Commercial Loan Agreement?
If a Commercial Loan Agreement needs to be ended the actions that must be taken will depend on the party that wishes to terminate the contract.
If you are a tenant that wants to know how to terminate a Commercial Lease Agreement early, the simple option is to make a “buy-out” deal with the landlord.
It’s also important to review the terms of your contract before ending your lease.
What Happens if the Tenant Wants to Change the Commercial Lease Before the End of the Agreement?
If you would like to make any modifications to your Commercial Lease Agreement before the end date, you will need to make an amendment. By using a lease amendment you will be able to officially change some or all of the Commercial Lease Agreement.
Any changes must follow the governing law of your state, the same as the original agreement.
What Part of a Commercial Lease Agreement Refers to How Many Employees May Work on the Premises?
The part of a commercial lease agreement that refers to how many employees may work on the premises is typically included in the “Property Use” or the “Permitted Use” section.
This section outlines the specific activities the tenant is allowed to conduct on the leased property, including the number of employees they are allowed to have on-site.
It may also specify any restrictions on the type of business activities allowed on the property. It is important for tenants to carefully review and understand the permitted use section of the lease agreement to avoid any violations and potential legal consequences.