A commercial lease agreement is used to establish a legal relationship between the owner and the tenant. The form takes into account all the terms of the lease and possible risks. It guarantees the security of both parties and is vital for resolving potential disputes over the use of commercial property.
This type of rental agreement is required in the business sector since most business people rent premises for their shops or offices. When it comes to large sums, it is necessary to draw up a contract and notarize it. Otherwise, the parties may face difficulties from which the law will not be able to protect them.
What is a Commercial Lease Agreement
This is a document that establishes the tenant's right to rent commercial real estate and the conditions to the landlord to be ready to lease the property. Both parties sign a commercial lease agreement if the business person is going to conduct their business on the territory of the leasing provider.
The premises that the owner rents out can be of various types:
- office room
- space in a shopping center
- farm building
- workshop or factory
Regardless of the type of commercial real estate, the commercial agreement lease fixes the cost and the terms of the lease.
The main thing that distinguishes this form from similar documents is that the commercial premises can only be used for business. It means that the tenant must not live in a commercial estate or accommodate employees of their company. If the premises for rent are part of the building, the parties can agree on the use of adjacent premises and territories (foyer and parking).
When You May Need a Commercial Lease Agreement
Small business owners often enter into a commercial lease agreement because renting commercial real estate is more profitable than purchasing it. On the other hand, the owners of commercial premises are interested in renting them out and getting money for it. When these two parties meet, there is a need for a commercial lease agreement.
After the agreement, both parties establish the rights and obligations of renting commercial premises. The owner and the tenant discuss how long the premises will be used and what equipment or furniture is needed for doing business. The question of how to equip, re-plan, and change the space is very important. All these details are included in the commercial lease agreement, and in the future relations of the parties, this document is the primary source of law in resolving disputes.
Given the importance of a commercial lease agreement, the tenant and the owner should discuss all issues related to the lease in detail.
Pros and Cons of Using a Commercial Lease Agreement
If you have found a suitable commercial space or want to rent it out and are still thinking about whether you should agree, just compare the advantages and disadvantages of the form.
The form brings you the following benefits:
- Clear representation of the rental terms.
- Guarantee of compliance with these conditions.
- Cooperation of the parties, supported by the law.
- Confidence in the future of your business regarding its placement.
- Protection against fraud or dishonest behavior of one of the parties.
You may have some inconveniences when agreeing:
- Spending time on a detailed discussion regarding the conditions.
- Time and financial costs for a notary.
- You will have to understand some legal subtleties.
- The agreement legally obliges you to comply with your liabilities, so it will not be possible to simply break the contract.
Having compared the pros and cons, you will understand exactly whether you need to enter into a commercial lease agreement or you are ready to risk your property or money. If you have made a positive decision, let's move on to the next section.
What Are the Main Components of a Commercial Lease Agreement
The agreement's content may vary depending on the details that both parties want to mention in the form.
However, the main components should be included in any type of agreement:
1. Name and Details of the Landlord
The section identifies the owner of the commercial premises.
2. Information about the Tenant
Here, details of the person who pays for the rental of premises are indicated.
3. The Term of the Lease
The section defines the rental conditions with the possibility (or impossibility) of extending the lease.
4. The Premises and Rental Terms
The landlord provides detailed information about the size of the premises and the services available to the tenant (cleaning, security, heating, etc.).
5. Public Areas and Conditions of their Use
This part of the form sets out what common spaces and premises the tenant can use (for example, shared parking space in a shopping center).
6. Additional Expenses
The parties fill out this section if the tenant has to pay for the operation of the premises and utilities according to the terms of the commercial lease agreement.
7. Rent and Deposit
Here, the landlord indicates the monthly or annual payment for commercial premises. The parties need to specify the amount of deposit that the tenant makes as a guarantor of their obligations and agreement with the terms of the contract.
8. Commercial Premises Improvements
If the tenant plans to do redevelopment or remodel the premises, this section specifies who will bear the costs.
9. Other Details
Here, the parties can specify how the premises should be used and what the tenant can and cannot do.
If both parties properly consider the terms and fill in all sections of the commercial lease agreement, it will guarantee their successful cooperation and protect them from potential risks.
How a Commercial Lease Agreement Works
Entering into a commercial lease agreement gives you the right to challenge the other party's behavior in case of a violation of the rules. If you are a landlord, you can have confidence that your premises will be used properly. In the agreement, you establish all the rules of use so that the tenant returns the premises without any damage and unwanted remodeling additions.
If you are a tenant, you will have the right to use the premises to meet your particular needs. A commercial lease agreement prevents you from discussing every step with the landlord since it works as an agreed instruction. You can be sure that your business will not be evicted from the premises before the deadline, and otherwise, you can appeal the landlord's actions in court.