A commercial lease agreement is used when the landlord wants to lease his property for commercial purpose. Mostly these properties are office space, commercial land, warehouses, storefronts etc. The lease must very clearly mention what purpose the property would be used for and what kind of business would be carried out in the property.
The Major difference between a residential lease and a commercial lease is that the residential property cannot be used for carrying out any business and the commercial property may not be used for residential purpose.
A Commercial Lease agreement can be of two types namely
- Gross Lease
A Gross lease agreement is when the Tenant only has to pay the rent to the landlord and the landlord will pay the other expenses such as property taxes, maintenance charges, insurance or any other expenses related to the property. Mostly this kind of lease is only in cases of multi-tenant properties such as a shopping mall, industrial complex etc. The landlord pays the other expenses by collecting the rent from all the tenants leasing on his property.
- Net Lease
A Net Lease agreement is when the Tenant pays a higher amount of rent which includes the other expenses such as maintenance, insurance , taxes, utilities and any other expenses as mentioned in the agreement. The net lease agreement again has three types Single Net Lease , Double Net Lease and Triple Net Lease.
- Single Net Lease (NET Lease) – Tenant is only responsible for the rent and the property taxes.
- Double Net Lease (NET NET Lease)- Tenant has to pay the rent along with the property taxes and the insurance of the property.
- Triple Net Lease (NET NET NET Lease) – Tenant has to pay the rent along with the property taxes, the insurance of the property and also the maintenance charges of the property.
Steps to Write a Commercial Rental Lease Agreement
- Enter date of execution of the lease agreement followed by the legal names of the landlord and the tenant on the respective lines.
- Enter detailed property address on the next line.
- Provide property description or the description of the Leased Premises.
- Enter the date of lease commencement and lease termination. Then enter the renewal lease term.
- Specify the amount of annual rent, monthly rent installment, address of the landlord for remitting the rent, and the amount of the security deposit on the respective lines. Enter the amount of annual and monthly rent in case of lease renewal.
- Specify proposed use of the property.
- Enter number of allotted parking spaces and the amount of additional rent for each parking space.
- Enter the addresses of landlord and tenant for sending notices.
- The landlord and the tenant must date and sign the lease agreement.