Nowadays, having a business enterprise is the dream of the population in order to survive and be wealthy. However, opening a business is not an easy task due to the need for manpower and the financial backup that a businessman must have. Additionally, the business company’s location is also significant to be constructed and prepared. This is when property owners of buildings, malls, and even vacant land areas offer their properties for commercial rentals and leases. But before a business company is built on the property, both the property owner and the tenant must agree to a commercial lease contract.
Commercial Lease Contract Form
Sample Commercial Lease Contract Form
Business Commercial Lease Contract Form
Commercial Lease Contract Form Sample in PDF
What is a Commercial Lease Contract Form?
A commercial lease contract form is a document that is used by property owners who aim to lease or rent out their properties to tenants, however, not for residential purposes but for business intentions. Compared to a residential lease contract, this agreement does not only focus on maintaining the property premises but also the rights of the tenant to expand the areas for his business as well as the operating fees that the tenant must provide to remain in the lease.
Varieties of Commercial Lease Contract Forms
Commercial lease contract forms have only a few varieties since there are two common leases that can be categorized as long- and short-term leases. Below are some of the varieties of this document that property owners and landlords can use for their business tenants:
1. Commercial Unit Lease Contract Form – This is the most common type of commercial lease contract form that is used by landlords of different sorts of properties. The form is applicable for long-term leases such as a period of five to ten years.
2. Preliminary Commercial Lease Contract Form – This type of commercial lease contract is intended to be provided by the landlord as a partial agreement or an initial agreement. When this form is given to the tenant, a succeeding contract that contains all the details of the lease must be created to begin the business transaction of a commercial lease. Although not all property landlords prefer to construct a preliminary document, it is significant for those who aim to obtain the ideas and the thoughts of the tenant regarding the lease before a final contract is made and signed by the parties.
3. Short-term Commercial Lease Contract Form – In contrary to a commercial unit lease contract form, this document is only intended to be used for tenants who are planning to rent out a commercial area within a short period. The purpose of this form is to limit the tenant to what he can manipulate in the rented area within his lease so as not to cause any changes that are not beneficial to the landlord’s property.
Commercial Unit Lease Contract Form
Essential Clauses to be Included in Commercial Lease Contract Forms
When constructing a commercial lease contract form, it is important to include the essential clauses and terms to assure that the intention of creating the contract is met along with the state’s regulations in conducting legal agreements for businesses. With this, a list of these essentials are stated below to aid any landlord and tenant towards the process of having an effective and negotiable commercial lease contract form:
1. Rent Clauses – This clause category refers to the rental fees and other payments that the landlord is expecting to obtain from the business tenant. Specifically, the price of the rent for each month, the date of when the paid amount comes to a due, and the period of rent are the inclusions to be stated in the rent clause. Additionally, the landlord can include a statement of the employee limitations that he allows the tenant to hire for the tenant’s area in order to secure the safety of the people in the commercial building or property.
2. Permit of Use and Exclusivity – There are some landlords who do not provide exclusivity to their tenants by means of approving other tenants to reside in the currently rented property. Although it is a sort of a helpful act, this lack of privacy and privileges to use the whole area of the property is a sure sign that the landlord does not observe respect for his tenants’ rights. This is why it is important that the tenant is informed beforehand as to whether there are others who are renters of the area or if the business location is exclusively leased for them. A statement or clause regarding the landlord’s approval for his tenants to use all the premises of the property is also significant to be included in the lease contract as well. You may also see equipment contract forms.
3. Alterations and Expansion Clauses – A business can expand their company along with the new employees that they hire within days and months of their operation. This type of business right must also be acknowledged by the landlord as well as the possible alterations that a business tenant will do to the area that he is renting. The alterations and expansion clauses of a commercial lease contract form will guide the tenant towards what actions are allowed to be taken in his rented property and what is prohibited to be changed in the period of the lease unless with the granted permission of the landlord. You may also see rental lease agreement samples.
4. Insurance and Maintenance Clauses – Getting insured is one of the topmost concerns of business owners and even mere individuals who want to secure their finances and lives. With this, the specific insurance coverage and policies that are catered by the landlord for his leased property must be enlisted and described in details in the contract. This ensures that the tenant will be able to know what issues and incidents are subjected to be paid by the landlord and what is expected to be paid by him in events or property accidents and situations. On the other hand, the maintenance clause is incorporated on the contract to aid the tenant in determining the types of maintenance procedures that he must observe for the property and the facilities that he needs to report to the landlord if there are concerns and problems that will arise during his tenancy. You may also see rental contract forms.
5. Foreclosure – A foreclosure is defined as the act of taking a property if the owner fails to comply with his mortgage obligations and responsibilities. If a property is headed for a foreclosure, the tenants must be protected and must be reassured that all the advance payments he provided will be given back or will be reimbursed. In addition to this, notice forms must be sent to the business tenants months before the day that the property will be foreclosed or when the tenants will be forced to evict the area due to a foreclosure incident.
Preliminary Commercial Property Lease Contract Form
Landlord Commercial Lease Contract Form
Three Tips for Negotiating a Structured Commercial Lease Contract
Negotiating in a calm and formal manner is the first thing that both the tenant and the property owner must observe. By having a calm negotiation, a sturdy and effective relationship will be promoted for the efficiency of agreeing in the contract’s terms and clauses. However, aside from the attitude that the parties should have during their agreement process, the tips below should also be considered for negotiating a commercial lease contract:
1. Know the Clauses and Terms – Reviewing a lease contract must not only be done by the tenant but also the landlord who will be signing the document for legalities. This is to ensure that all the statements and the clauses written on the contract are the exact ones that have been agreed on by both parties. This is also an important step to always keep in mind especially if the contract was constructed and structured by an attorney and any other legal service provider who represents the landlord. Minimal details such as the date of when the terms of the contract will begin to be executed and the identities of the property owner, the attorney, the witnesses, and the business tenant are essential to be reviewed and corrected necessarily. You may also see residential lease forms.
2. Determine the Type of Lease – There are different types of commercial leases depending on what the landlord prefers and what the tenant agrees to negotiate with the landlord. One of the common types of commercial leases is a percentage rent lease that refers to the specific percent of the amount that the tenant must give from the portion of his business sales and income. By having the type of lease determined, the tenant will not be booted with hidden and surprise fees due to the lack of knowledge regarding the lease’s terms. You may also see apartment lease forms.
3. Acknowledge the Market – Globally, there are tons of commercial properties ranging from two-floored warehouses to a fifteen-floored building in the city. These properties are built depending on the demand of the market, similar to creating a business and operating it based on what the consumers need. When both parties know what the necessities of the target market are, they will be able to distinguish the costs of the fees and payments. You may also see house contract forms.
Short-Term Commercial Lease Contract Form
Regardless of the variety of lease contract form that a landlord prefers to use, he must assure that the terms, conditions, and the clauses written on the contract are not only promoting an advantage for his own property business but also for the welfare of his tenants and clients. The form must also be duplicated in order for the tenant to have a copy of the agreement for his reference whenever questions and inquiries arise in the absence of the landlord. You may also see basic lease agreement forms.
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