What Clauses Should A Commercial Lease Contain?

Finalizing a commercial property lease marks an important milestone – a successful agreement that has been reached between landlord and tenant and a business can soon occupy that new location. Before that can happen, any commercial lease negotiations must be documented within the lease itself to ensure all agreements are recognized and understood. Leases must also include clauses for any specific agreements that are not standard agreements, as not including them could spell future trouble for tenants.d

Standard Lease Agreements

Every commercial leasing arrangement is different, as every tenant has different needs and each landlord has different leasing requirements. Despite those differences, the basic process of the best commercial lease negotiations is the same, at least in the beginning.

Because of this, many leases are written based on a standard commercial leasing contract that is modified to fit individual circumstances. This saves a lot of time and work on the lessor’s side; however, it can cause mistakes or omissions and leave the lessee vulnerable. To avoid such complications, every lease must include certain clauses, which is why it is also important to work with the best commercial lease negotiations company.

Commercial Lease Clauses

So what is a clause? In a lease, a clause is a statement that specifically outlines something that has been agreed to by both parties. If a clause is not present, standard industry definitions are then assumed. Therefore, the best commercial lease negotiations companies advise there are some important clauses that should be present in every commercial lease, including the following:

  • Basic Clauses – These clauses outline the assumed standard, such as: base lease rent; rent due date and what is included; length of lease; detailed description of property; how the property may be used and during what hours; statements regarding rent increase procedure; what happens at the end of a lease term; the right to renew; and agreements on either party’s right to end the lease.

  • Improvements – These clauses specifically outline agreements in commercial lease negotiations relating to what types of improvements are allowed and more importantly, who is paying for them. As most commercial leases include some kind of budget from the landlord for improvements, this is a critical area that must be addressed in detail in a lease contract.

  • Maintenance and Repair – Maintenance of the property must be described in detail in the lease contract, as well as who is responsible for it and who pays for it. Some maintenance items may be the landlord’s responsibility, while others are the responsibility of the tenant. The same distinctions must be detailed for repairs. In the best commercial lease negotiations, these things are worked out before signing the lease, helping to avoid later complications when maintenance or repair is needed.

  • Insurance – A description of what type of insurance must be carried and by whom as well as what coverage is included is also essential. Failing to thoroughly cover a commercial property could leave a landlord or tenant responsible for damages that may occur. So it is essential that coverage be defined during commercial lease negotiations and thoroughly referenced in the lease.

  • Other Specific Clauses – Every leasing situation is unique and other questions may arise during commercial lease negotiations, necessitating more specific clauses. In addition to the above, clauses outlining things such as signage use, pet clauses, and agreements regarding a tenant’s right to sublease extra space may be included.

  • Breach of Contract – This essential clause, discussed during commercial lease negotiations, documents any agreement on which party is in violation of the lease contract and how it will be handled.

Even the best of commercial lease negotiations is a lengthy process. Creating the appropriate lease contract requires ample time to get the contract written perfectly. The most experienced commercial lease negotiations companies suggest a business thinking of renewing a lease or searching for a new property should start their search and negotiations well in advance of any occupancy date!

Need Experts For Commercial Lease Negotiations in Dallas?

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By |January 20th, 2015|commercial lease negotiations in Dallas Texas|Comments Off on What Clauses Should A Commercial Lease Contain?