What Is a Commercial Lease Agreement?
A Commercial Lease Agreement - also known as a Commercial Real Estate Lease or a Commercial Property Lease - is a formal document signed by the landlord (lessor) and the lessee renting business property - for example, an office or an industrial space. This contract gives the lessee the right to use the property in exchange for payment to the landlord. There is a misconception about lease agreements being used only to rent apartments and homes, which is not true. Companies also can use leases to rent out offices or entire buildings to use for various business purposes. Since it is cheaper for a company to rent commercial space than to buy this property, it makes total sense for a business to enter into a commercial real estate lease.
A residential lease agreement is a related document used when the landlord rents property to the individual. This contract can be used to lease any type of habitable property – a house, an apartment, or a room.
A sublease agreement is a document signed by the original lessee (in this case - the sublessor) and an individual who wants to rent the same space (sublessee). With the landlord's consent, the sublessee can rent the property from the lessee. This form is widely used for commercial and residential leases alike.
Where Can I Get a Commercial Lease Agreement Form?
If you want to find an office space or to rent out units in your building for commercial use, it is necessary to negotiate an agreement to clarify expectations, write down rights and obligations of the parties, and talk about any concerns the landlord and the lessee may have about the property and the type of business to be conducted there. C
How to Draft a Commercial Lease Agreement?
There are three main types of commercial lease agreements:
- Gross lease. The landlord pays all or most costs and expenses;
- Net lease. The lessee has to pay all or some taxes, maintenance, or insurance;
- Percentage lease. The lessee pays rent and gives the landlord a percentage of monthly sales.
Generally, agreement for commercial lease includes the following information:
- Names and contact information of both parties;
- Address of the property that is rented and its specific description;
- Duration of the agreement;
- Rights and responsibilities of the landlord and the lessee;
- Description of the business to be conducted on the property;
- Amount of rent and the payment method;
- Security deposit clause;
- Requirements in relation to upkeep, maintenance, and changes to the property;
- Signatures of both parties and mutual agreement to enter into a lease contract.
Determine the conditions of the agreement before committing to a lease to reduce the probability of negative consequences. Think about the current and the future needs of the business (possible downsizing or growth), the subletting, and potential improvements to the property.