A sound lease agreement for a commercial property ensures that both the landlord and tenant are satisfied with the way the property is rented, occupied and maintained. While leases can change over time in response to fluctuations in the real estate market, the initial lease should seek to establish major ground rules about the use of the property and answer many common questions that may come up on the part of the tenant. This helps the day-to-day operations of the property run more smoothly and ensures that maintenance and repairs are done in a timely manner.
If you are looking to lease commercial space to a local shop, office or other industry, make sure your lease addresses these common questions.
The beginning of the lease agreement should contain the name of the landlord and tenant, as well as a statement of the agreement into which they are entering. The introductory paragraph should also include the address of the property being leased, as well as the start and end dates of the lease.
Dedicate an early section of the lease agreement to the rent on the property. State the amount of the rent, how often it is to be paid and rules about late payment.
If you require a deposit on the property, dedicate the next section of the lease to discussing it. Include the amount of the deposit and when it is to be paid. Also describe what the tenant must do in order to receive a whole or partial refund of their deposit.
Under the vast majority of leases, the landlord covers property taxes and associated fees. However, the renter is generally responsible for taxes on business property. Break down how taxes will be paid in a designated section of the lease.
Property insurance is generally the responsibility of the landlord, while insurance on any personal items is the responsibility of the tenant. Most leases require that both parties carry a separate insurance policy for the duration of the tenant’s lease in order to prevent disputes in the event of damage or theft.
Utilities and Amenities
Outline which utilities are the responsibility of the tenant and which are to be paid be the landlord. You can also use this section to discuss who is responsible for paid janitorial services, snow removal and other services.
Remodeling and Improvements
Outline what types of improvements and changes to the property the tenant is allowed to make. If the landlord plans to make improvements upon request from the tenant, this section can also be used to outline the method for submitting a request to improve the property.
Repairs and Maintenance
In most states, the necessary repairs to make a property inhabitable are the responsibility of the landlord and should be made promptly once the landlord has been notified. Other repairs of non-essential items may be the responsibility of the renter.
Dedicate a section to outlining if and under what conditions the renter is allowed to sublet the property. If subletting is permitted, outline what responsibilities will fall to the tenant.
Include a legal disclaimer about conducting illegal activity on the property. Most landlords choose to reserve the right to terminate the lease immediately if illegal acts are discovered.
Terminating and Renewing the Lease
Outline the process for terminating the lease, as well as renewing it when the current lease is up. Consult your local laws and regulations when writing this section, as there may be laws governing when and how notice may be given.
Remember to get any contract looked over by a lawyer before signing it. There may be specific rules and regulations about what needs to be included in a lease agreement in your particular jurisdiction.
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