Commercial Lease Contracts: Everything You Need to Know
Commercial lease contracts are used if a business property wants to rent to or from a company or individual. 3 min read
Commercial lease contracts are used if a business property wants to rent to or from a company or individual. This gives the renter or tenant the authorization to use the property if it's for the purpose of business during the length of the lease. This is in exchange for them paying the business' landlord. Almost every business needs a storefront or office space. Having a commercial lease allows the landlord to be protected in case the business owner becomes liable for their actions.
A lease covers tenant and landlord information, which includes the rent, the length of the lease term, a guarantor, and any important information which is part of the terms of the lease. The longer version of the contract allows for more details and is more inclusive. The short version has no terms or clauses that aren't necessary and is a general lease agreement.
Whenever a commercial property gets rented from a tenant or landlord, a commercial lease agreement should be used. This lease should be used for owners of an industrial space or warehouse that want to lease another building, when leasing commercial space from a landlord, and when owning an office building and wanting to rent out workspace to other people or businesses.
Commercial lease contracts have other names they're known by. These include:
- Industrial lease.
- Office space lease.
- Commercial property lease.
- Commercial real estate lease.
- Business lease.
Are There Various Types of Commercial Properties?
An office space is a type of commercial property that's made up of different offices used by a variety of varying professions and trades in the same building. Single-tenant properties can also be included. An office space can make up legal offices, accounting firms, or other types of trades.
Restaurant and retail space can often be found in malls, strip malls, and shopping centers. It can also cover specialty eateries, chain stores, fast-food restaurants, clothing stores, or physical stores of businesses found online. An industrial space is normally rented out to companies that need storage space, warehouses, companies that need industrial space, manufacturing buildings, or factories.
Commercial space can also be made up of other properties that are non-residential. Examples of this are medical clinics, hotels, and self-storage facilities. A parking or garage rental agreement is space that's used to park vehicles. A facility event space rental agreement is used to rent out space for an event.
What Is a Landlord Responsible for With Commercial Property?
A landlord is in charge of making sure that commercial use is allowed on the property and that this property meets the requirements for commercial use for the activities being conducted. As an example, an individual can't run a restaurant in an office building unless they have met specific building bylaws and codes.
The landlord of the property needs to decide what the tenant will do with the property and allow them to do so. They should find out what kind of business they'll be running, such as finance, real estate, etc. The landlord decides if the tenant has exclusive use, which means they're the only one allowed to run that business in the building. An example is letting a coffee shop run their business in a strip mall.
The terms of a commercial lease may be weekly, monthly, annually, or a longer term that's on an occasional tenancy or fixed renewal. The tenant can decide to pay a fixed rate in addition to their rent, or a percentage of the operating costs and utilities. The landlord decides how to distribute the costs and if the tenant pays the utility companies or the landlord. Some landlords will ask the tenant to pay a portion of the property tax.
If parking is an option, it can be free, part of the rent, or added on as an extra fee. A tenant may have specific improvements they want done to the property to help them with running the business on a daily basis. The landlord is in charge of approving the changes and often paying for and completing them. Any improvements made are transferred to the tenant once the lease is over.
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