Commercial leases are essentially a contract between a tenant and the landlord of a building. It is important for the tenant to remember that the terms of the lease are always negotiable. It is wise for certain provisions to be added by the tenant to ensure their needs are accounted for during the term of the lease. To help you with your own lease agreement, the following is just a short list detailing some of the most common provisions tenants can ask for.
General Provisions
To start, learn what the generic and most basic provisions are.
• Property – The lease must include a provision that describes the property, including street address, suite number, and square footage.
• Fees – Every lease needs to detail which party will be responsible for which fees, including insurance, maintenance, janitorial services, utilities, and property taxes.
• Rent – Includes all information about the rent, including amount, how it is paid, which fees are included, and what will happen if rent is neglected.
• Security Deposit – Explains all details of the initial deposit, what it will be spent on, the terms for it being kept by the landlord, and whether it will gain interest.
• Escalation Clause – Includes information about what circumstances allow the landlord to raise rent. Nearly every lease includes this provision.
• Term – Leases must include information about its length. It should detail, in months and days, how long it will be in effect and include the end date.
End of Lease Provisions
These provisions deal directly with what will happen when the lease comes to an end or what can end it early.
• Destruction – Details what happens if the property is destroyed or seriously damaged. The landlord may be required to rebuild, and this provision should also state whether rent will be abated.
• Landlord Solvency – Explains what rights the tenant has if the landlord faces financial troubles, cannot meet lease agreements, or if there is a foreclosure on the property.
• Going Dark Rights – What rights the tenant has if they are forced to close their business. Usually they are allowed to pay reduced rent if they will not be in the property.
• Purchase Option – Many leases include a provision to allow the tenant to purchase the property at the end of the lease.
• Renewal Option – States whether the tenant is allowed to renew the lease upon its conclusion.
• Termination – Details what state the property must be in when the lease comes to an end.
Property Management Provisions
Some provisions deal with altering the property itself, either by detailing what changes must be made or stating what must take place if certain unexpected changes happen.
• ADA Compliance – This provision officially states whether the building is in alignment with the Americans With Disabilities Act. If it is not, it states who will be responsible for making it compliant.
• Expansion – Details whether the tenant can add adjacent spaces to their business or move to larger spaces in the same building.
• Landlord Improvements – Specifies if any improvements are required of the landlord before the tenant takes hold of the property.
• Tenant Improvements – Includes all information about whether the tenant is allowed to make changes to the property and what changes are allowed.
Other Provisions
Finally, there are a few more provisions that are unusual or do not fit into other categories.
• Competition – Deals with the landlord’s right to rent property to other businesses. Some businesses, especially in retail, want to prevent competing businesses from moving in nearby.
• Right of Entry – Allows the landlord to enter the property as they need to.
• Grace Period – Allows both parties a certain amount of time to comply with the terms of the lease.
• Enforcement – Details how the terms of the lease will be enforced and who will pay any attorney fees.
• Use of Premises – Restricts the use of the property.
• Zoning – Explains the laws regarding what types of business can be in the property and other legal restrictions.
Legal Disclaimer
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.