A commercial lease is a legally binding agreement between a business tenant and a landlord that gives the tenant permission to use the property for commercial or business use for an agreed period of time. The lease will outline the payment schedule required for the lease as well as the rights and responsibilities of both the tenant and the landlord during the lease period.
For the most part, commercial leases and residential leases are relatively similar, but there are a few differences that you need to be aware of before signing. Generally, tenants of commercial properties are not entitled to as much governmental protection as residential tenants.
Commercial tenants are expected to be more knowledgeable about the ins and outs of contractual obligations and are likely better suited to the responsibilities of a commercial lease agreement than someone renting a residential property for the first time. A commercial lease also leaves more room for negotiation between landlords and tenants due to the assumption that both parties are experienced in business practices.
A commercial lease will include information such as:
– Personal details about the tenant and landlord (such as contact information)
– Whether or not a guarantor is required
– Details specific to the property (such as the size of the space and any amenities)
Whether the tenant is provided with the use of the property exclusively
– Letting information, such as the length of the agreement, the cost of rent and details about how the premises may be used
– If improvements and renovations will be permitted and if they require approval from the landlord
A commercial lease will include one of three different types of lease terms to suit different tenant and landlord requirements, including:
A periodic tenancy will continue until either the tenant or the landlord ends the lease by providing the other party with sufficient notice.
This type of tenancy means that the property is being let for any agreed amount of time and neither the tenant or landlord is required to give notice. At the end of the term, the tenant and landlord can choose to continue or terminate the lease.
This is a type of lease term that will terminate at an agreed date. On the agreed date, either party can choose to end the lease or renew it.
In a commercial lease, the landlord responsibilities will often include:
– Collecting rent and utility payments (if required)
– Outlining how the tenant is permitted to use the property
– Upkeep of the commercial property or building
– Making sure that the property or building meets health and safety requirements
– Any seasonal maintenance tasks, such as landscaping or snow removal
– Making sure that rent payments are given to the property lender (if it is mortgaged) as well as providing insurance for the property
In a commercial lease, the tenant’s responsibilities will often include:
– Rent for the space
– A portion of the cost of utilities, unless they are required to make direct payments to the provider
– The cost of minor improvements, such as office supplies and paint
– Property taxes
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