From large-scale department stores to more specialized and residential off shops, stores are at the heart of a society’s economic activities. That is why, if you own a space or commercial property in a prime location, it’s a good idea to lease it out to business owners. And that would mean completing a shop or store lease agreement to ensure that your interests are well-protected. Agreements can be lengthy, but with this article, you will know what to look for in a shop/store lease agreement that seals that deal. Read More
Aside from residential spaces, commercial spaces require lease/rental agreements as well. Bearing more or less the same content with residential lease agreements, store or shop lease agreements is the agreement between the lessor and a tenant who is willing to pay for the rent and other dues of the space. The document binds both parties to be liable for the agreed conditions until the end of the agreement.
How Do You Create a Shop/Store Lease Agreement?
Rental spaces that are specifically for specialty shops or department stores are categorized as commercial real estate. These pieces of property are intended to generate profit for the landowner or lessor. As the lessor, you must be knowledgeable on how to create a lease or rental agreement that you must negotiate, sign, and distribute to each tenant. Here are a few steps and tips on how you should create a comprehensive store rental/lease agreement.
1. Determine the Parties
A store lease agreement begins with the introduction of the parties. As this document deals with commercial spaces, both parties must be careful with the names that they will use. The lessor can be the name of an individual or name of the company. If you choose the latter, make sure to use its legal name—the one that is registered and licensed. This clause also requires the mailing addresses of both parties.
2. Finalize the Basics of the Lease Term
The following segment of the document is the list of the agreement’s terms and conditions. The first part describes the lease term and property in detail. It requires the details of the leased property and the duration of the lease. The details of the payment arrangement are also finalized in this part of the document. The document should clearly define conditions about late fees, security deposits, and payment options. Other than those mentioned, you also need to provide the option to renew the agreement as a clause.
3. Determine the Obligations of the Tenant
Since the purpose of the lease agreement is to lay out the guidelines the obligations and responsibilities of each party. Thus, the obligations of the tenant to care for the property must be presented clearly. There are several clauses regarding this matter in the document. It is the responsibility of the tenant to read each statement and remember what they need to do. Multiple breaches of the signed agreement can lead to the termination of the contract.
4. Point Out the Responsibilities of the Lessor
On the other hand, the contract also presents both major and minor responsibilities of the lessor. These responsibilities often include, but not limited to, the guidelines of their entry and access to the property, maintenance and repairs, and the assignment and possible subletting of the property. There are several matters included in the document that are well defined and clearly states the role of the lessor.
5. Notarize the Document
The document ends after stating all the terms and conditions statements agreed upon by both parties. Both parties must then affix their signatures but make sure that your state laws do not require the notarization of the document. If the law requires it, make sure to meet with a notary public first before signing the agreement.
When is a commercial lease agreement needed?
A store or shop space is considered as a commercial real estate. So, this agreement can be considered as a commercial lease agreement. It is needed when you own an office building or workspace that you want to rent out to others; when you own industrial spaces, such as warehouses; and when you are leasing a space from a landlord.
How do I cancel a store lease?
One way to cancel the arrangement early is to discuss with the landlord and surrender the lease. When the lease is surrendered, it means that both the landlord and tenant are in agreement of the arrangement’s cancellation and that the landlord is no longer liable for the tenant.
Is it smart to personally guarantee for a store lease?
The main rule is to separate personal assets from commercial assets. So, it is not a smart move to personally guarantee for a store lease. Avoid guaranteeing your savings or other personal property to protect the solvency of your company.
What do I need to consider before terminating the lease early?
There are several matters that the tenant must take into account before terminating the agreement before the target date. One main concern is the possible penalties that you might face. The penalties may most likely include monetary fines, so make sure to discuss it with your landlord. You can also consult with a lawyer to make sure.
How do I get my lease notarized?
The process is simple. Both parties must visit the court or a sub-registrar office and then approach a notary public. The next step is to explain to the notary public the need for the notarization.
Stores, whether small-scale or large-scale, are essential determining factors of a flourishing economic growth in an area. In order to thrive in these areas, business areas make sure to establish their ventures in prime locations. And one of the easiest ways to secure these locations is to lease or rent an established space. Thus, store lease agreements are essential documents for any commercial real estate owners who want to earn more by renting out their spaces.