What Are the Main Provisions in a Commercial Lease Agreement?

Renting and leasing can be a pain for property owners. Because of this, some property owners prefer to lease to businesses rather than individuals.

In the United States, commercial leasing is a $177 billion market. If you own property, you may want to get in on that action instead of chasing down individuals who are late on rent payments for your property.

The question is, what do you need to know before jumping into that game? Here is your guide to a commercial lease agreement.

Rent Clause

Depending on what type of business you are leasing to, you could establish a specific rent clause for them.

In some cases, property owners will ask for a percentage rent. This is when the business that is leasing your property gives you a percentage of their monthly revenue on top of the base rent.

The percentage rent is usually about 7% of the monthly revenue. This could work best in malls and mini-mall types of property, getting revenue from restaurants, clothing stores, jewelry stores, and more.

Description of Premises Clause

This is the clause that describes in exact detail what part of the property a business is leasing from a property owner. This is more important when a business is only leasing part of a building or part of the land that the owner has.

So for example, if you are leasing part of a building, you are going to want to know the exact room or rooms in the building that you have access to, what parking spaces, what fencing, etc. You will want to get that in writing, for the sake of both sides so that way there is a reference point if one party violates the terms of the agreement.

Having a description of the premises in writing will provide clarity to the business from the beginning of what part of the building they will be able to use.

Term Clause

This puts in detail when the other terms in the leasing agreement begin to take place. Rent can be one of the biggest things negotiated here for a new business.

For example, a business may sign a leasing agreement with a property owner and may not be ready to start moving in for three months. Some term clauses will let businesses wait until they move in and get ready for business before they start paying rent.

Maintenance Clause

The maintenance clause is exactly what it sounds like, as this makes clear who is responsible for what damages and upkeep may arise on the property.

The property owner may put something in this about keeping the building up to code. Other issues that may arise are if a pipe bursts, if a business puts a hole in the wall, if there is mold in the building, natural disaster damage, and if there is damage from a fire.

These are all things that will have to be written down in the agreement before proceeding.

Get Your Commercial Lease Agreement

These are just a few of the possible clauses that can be part of a commercial lease agreement. Do you want to find out what else is in there? Are you ready to get started?

Contact us to learn more today!

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