Caution to be considered while creating Commercial Lease Agreement

With the regular expansion in businesses, merchants look for better spaces. To plan, execute and meet customer demands of, better workspace is needed. And, commercial leases can be sickening and tiring to create and carry forward. Before you come face to face for documentation, you need to find the ideal office or commercial space.

The location needs a good recce so that you can settle down for long period unlike residential leases. The place should meet all your business needs in terms of accessibility, budget, size, availability of human resources, presence of human traffic, and a well-established infrastructure.

Having first ever interaction with Commercial Lease Agreement? Well, it is a legal binding document between the landlord and tenant, solely for business purposes. The signing of the lease signifies the transfer of the right to use a commercial space from a landlord to a tenant for a specific duration and a specific agreed amount.

Difference between commercial lease agreements and residential lease?

  • Tenants under residential contracts receive more legal protection because most tenants are not fully aware about leases. But, in Commercial Agreements, it is assumed that the parties have needed information about the leases and its conditions.
  • Commercial leases are more negotiable than the residential leases.
  • Commercial lease may be more expensive or cheap, depending on understanding of the terms and types of leases.

Before finalizing and signing a lease, you must review the terms of the lease against your business needs. Some important evaluations include:

Type of property/ Description/ Zoning

The commercial property lease agreement must have the details of the business you intend to lease. Ensure that the state or county officers’ zone the location for this business. Then, get the exact dimensions of the space, confirm the address and ownership details.

Lease Term

The length of the lease. Is it fixed or periodic, short-term or long-term? Ensure that the terms of promote the growth of your business, even when the future of the business is uncertain.

Rent payments

All commercial leases need tenants to pay a base or minimum rent. In most cases, a tenant pays the base rent as well as property expenses or a percentage. Here is a list of things that need a cautious review and negotiation before the lease agreement:

  • Security Deposit
  • Tenant Improvement
  • Compliance of space with state and federal laws
  • Subleasing and assignment
  • Relocation: Will the space offer you advantages as compared to older location?
  • Repairs
  • Exclusivity clauses
  • Parking
  • Signage and advertisement

You can now create an online Commercial Lease Agreement with Forms.Legal that offer free legal templates & forms.

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