Commercial Lease Agreements

A commercial lease is an official agreement between a landlord and a company for rental of premises for business. This can be office space, retail space, or factory and manufacturing space.

This blog will provide you with some insight as to what clauses you need to make sure are included in a commercial lease agreement. This is necessary if you intend on renting out commercial space.

Important Points to Remember

There are a few key aspects of commercial leases which one must bear in mind:

  • Generally, depending on the jurisdiction, consumer laws do not apply to commercial lease agreements
  • While residential leases are normally for a year, commercial leases tend to be for a period of three to five years, or longer
  • Again, actually depending on your jurisdiction, there may be associations you should join as a commercial landlord. This will help you understand your responsibilities, as well as ensure compliance with the relevant laws, such as health and safety.

Necessary Clauses

These are some of the clauses you must ensure are included in your commercial lease agreement:

  • Full property description and the purpose for which it is let. You must specify whether the property is rented as office space or retail space, etc.
  • Rental amount, as well as the annual escalation of the rental. You will also want to ask for a security deposit from the tenant to cover potential damages to the property
  • An option to renew the lease at the end of the initial period
  • Signage; make sure to include whether the tenant is entitled to put any signs outside the leased premises, and who is responsible for these costs
  • Make sure to state whether the tenant is entitled to sub-let the premises or not
  • The breach clause may be one of the most important. Should the tenant fail to make their payment of rent, you will rely on this clause in placing them on terms to pay and cancelling the lease.