Commercial Lease AgreementFrame Legal, LLC
Commercial Lease Agreement Terms
Our Charleston corporate lawyer frequently draft, prepare, and review commercial lease agreements for our clients. We have been able to identify and list below some examples of critical terms in commercial lease agreement:
This paragraph generally sets forth the names, addresses, and types of business entities of each party to the lease agreement.
Landlord would likely want to ensure that the lease agreement lists the proper responsible party to the lease. This may be a business entity
, an individual, or both. The party description may become important if the event the landlord must enforce particular provisions of the lease agreement to collect rent, enforce tenant’s obligations, or to event tenant.
Tenant would likely want to ensure that the lease agreement lists the proper legal entity as the landlord. Additionally, if a business owner, the tenant would likely want to list the proper legal entity as the responsible party to the lease, rather giving a personal guarantee.
Use Of Premises:
This paragraph states the permitted uses of the Premises.
Landlord would likely want the commercial space be used exclusively for a specific purpose, such as for an office. Thus, even if zoning laws may permit, the landlord would want to incorporate into the lease agreement that the commercial space only be used for the landlord’s intended particular purpose, and not to be used for some other purpose.
Tenant would likely want the broadest possible use of the commercial space not only for Tenant’s own business operations, but also in the event Tenant assigns the lease or sublets the commercial space to a third party. Thus, the tenant would want to negotiate the “Use of Premises” provision broadly.
This paragraph generally specifies the date on which the lease term is expected to begin, the date on which the lease term will actually begin, the date on which the lease term will end, and the duration of the lease agreement.
Landlord would likely want to specify a limited term to tenant’s occupancy of the commercial space. Generally, this provision would identify the date from which the rent would commence, and, thus, be calculated.
For budgeting purposes, the tenant would likely want to identify the date after which the tenant lease payments under the lease agreement will commence. Additionally, this provision my protect tenant against not having a interest in the commercial space for the desired period of time, and eliminates any doubts as to the specific duration of tenancy.
Additional Rent (Net Lease):
This paragraph generally incorporates the net lease concept whereby tenant pays its proportionate share of real estate taxes and building operating expenses.
Generally, this provision would likely protect the landlord from having to absorb the costs of real estate taxes and/or the maintenance and operation of the commercial space. These costs could presumably be passed to the tenant on a prorated basis.
The provision may also protect the tenant from having to pay more than its fair shore of the real estate taxes and maintenance and operation expenses for the commercial space during the term of the lease agreement. The provision may allow the tenant to audit landlord’s statement of expenses and to obtain credit for any overpayment. Additionally, the provision may allow the tenant to object to certain maintenance and operation expenses for the commercial space incurred by the landlord.
Our Charleston corporate attorneys develop, draft, review and negotiate commercial lease agreements for our business clients to ensure their best interests.