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What to include in a commercial lease agreement

On Behalf of | Jul 7, 2024 | Real Estate |

Purchasing and developing commercial property can be a lucrative enterprise. However, finding the right tenants can sometimes be difficult. One way to protect your commercial investment is by having a thorough lease agreement.

A well-drafted lease agreement is critical in protecting both parties’ interests and ensuring a clear understanding of their rights and responsibilities. While some items may vary, there are key components that should be in every commercial lease agreement.

Benefits for landlords and tenants

The landlord needs to precisely describe the leased premises, including square footage and any specific areas included in the lease, such as parking spaces or storage units. It should also delineate what are considered common areas.

Certain utilities (water, sewer, garbage and electric) may be included in the rent in commercial leases. The agreement should outline what’s included and what the tenant is responsible for.

The tenant needs to be aware of the permitted use of the property and ensure they use the space in a manner consistent with zoning laws. The lease agreement should also provide an approval process if the tenant wishes to make any alterations, improvements or modifications to the leased premises.

A commercial lease agreement should also outline who is responsible for maintenance and repairs. The landlord typically maintains the common areas, the exterior, structural issues and major systems, such as HVAC, plumbing and electrical. The tenant is usually required to take care of routine maintenance issues, interior repairs and upkeep of their leased space.

Unfortunately, sometimes disputes arise between landlords and tenants. The lease agreement needs to include provisions for resolving those disputes, whether through mediation, arbitration or litigation.

A thorough commercial lease agreement protects both the landlord and the tenant. It can also help separate the good tenants from the bad early on. Having experienced legal guidance when drafting an agreement will help ensure that it is legally sound.

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