About Alabama Commercial Lease Agreement

A lease agreement refers to the agreement between the person or company who owns the commercial property, or the lessor, and the person or company who will lease the commercial property, or the lessee. The majority of commercial lease agreements in Alabama are subleases, which means the property owner is leasing out a portion of the property.

When the lessor agrees to lease a part of their property that can be used for a commercial business, this agreement becomes a legally binding contract in the state of Alabama. The lessor will usually require a personal guaranty is a business has few assets or was formed recently. This personal guaranty puts the responsibility and liability on the business owner for the lease contract's performance.

How to Write an Alabama Commercial Lease Agreement

As you draft a commercial lease agreement for use in the state of Alabama, it's important to understand that the process will usually go through a number of revisions and drafts. Start the process by agreeing verbally on several key issues:

  • Lease term
  • Base rent
  • Renewal options

Your lease agreement should include a header area with the legal names and addresses of the lessor and lessee. Next, you can include any of the following sections that apply to your lease term:

  • Description of premises being leased
  • How the premises being leased will be used
  • Agreement terms
  • Renewal options
  • Expenses and rent amount (include whether the lease is gross, modified gross, or triple net)
  • Required security deposit
  • Improvements the tenant is allowed to make
  • Default on rent (penalty for late payment)
  • Any additional miscellaneous terms of the agreement
  • Contact information for the lessor and lessee for legal purposes
  • Signature from each party (for large-scale lease agreements, the signatures should be authorized by a notary public)

Another option for your Alabama commercial lease agreement will include:

  • Lessor's name
  • Agent's name (if applicable)
  • Tenant's name
  • Description and use of premises being leased
  • Lease terms
  • Base and additional rent amounts
  • Late fees
  • How tenant will take possession
  • Required security deposit amount
  • Conditions of the premises being leased
  • Nuisance
  • Disclaimer from the agent (if applicable)
  • Outside areas and roof condition
  • Repairs handled by the lessor
  • Showing and inspection terms
  • Improvements, alterations, signs
  • Upkeep, repairs, utilities, and compliance by the tenant
  • Whether the property has any liens
  • Indemnity and public liability insurance
  • Any defects of the premises being leased
  • Default events
  • Waiver of exemptions, default attorney costs and fees, rent acceleration terms
  • Re-letting and abandonment of property
  • No bar and re-entry
  • Additions and improvements of the property by the lessor
  • Fire and other casualty
  • Lease assignment fee clause, conditions, assignment, and transfer
  • Demands and notices
  • Agreement for agent's commission (if applicable)
  • Hold harmless agreement
  • Subrogation rights waiver
  • Holdover
  • Condemnation and eminent domain
  • Attornment and subordination
  • Terms for cleaning the leased premises when agreement is terminated
  • Insurance and taxes
  • Requirements for use of hazardous materials on the leased premises
  • Addendum clause
  • Legally binding effect of the contract
  • Terms of the lease
  • Definition of the term “lessor” or “landlord”
  • Authorization to sign the legal contract
  • Regulations and rules
  • The disclaimer from the Birmingham Association of Realtors, release of claims and waiver, and signatures of the lessor, lessee, and agent (if applicable)

Upon signing the agreement, all parties should receive an original copy. When the contract is executed, the lessee should pay the required security deposit and receive access to the property based on the terms of the lease.

If you want to use a simplified version of the Alabama commercial lease agreement form, it should include:

  • Terms of the lease
  • Rental terms
  • How the property will be used
  • Terms for assignment and sublease
  • Repair requirements
  • Improvements and alterations
  • Required property taxes
  • Utilities
  • Insurance
  • Addition of signs
  • Entry allowance
  • Parking
  • Rules of the building or property
  • Condemnation
  • Quiet possession
  • Security deposit required
  • Notice
  • Subordination

Basics Every Rental Lease Agreement Must Include

One of the basics that every rental lease agreement must include is a definition of the involved parties. This section will outline who the agreement is between and could include the lessor or landlord, the tenant or lessee, and the agent(s) for either or both parties.

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