Commercial Lease

What are the terms of a commercial lease

When undertaking a commercial lease there are few terms that need to be understood so that it is easier to negotiate the terms and conditions of the lease.

The first term in a commercial lease agreement is the lessor. The lessor is used to denote the person who is the grantor of the lease. This normally is the term to denote the landlord or the owner of the property but it can also denote the property management company.

The lessee is the tenant.

The Common Area Maintenance is the term which does not mean the part that is leased but it means the parts which are common areas such as hallways, stairways, walkways. The lessors add this common area maintenance to the cost of the square foot when they are calculating the lease payments.

Fully serviced leases which include everything including the maintenance, utilities, as well as, lawn maintenance or snow removal. These fees are paid by the landlord.

A Gross Lease is the lease where the landlord pays for utilities, repairs as well as property taxes and insurances. This lease type is the most expensive as all the items are part of the lease. A commercial lease where the square foot cost, common area maintenance as well as the ownership expenses are all included is called net lease.

A double net lease is when the taxes as well as insurance costs are not part of the lease payment and the lessor need to pay maintenance cost.

HVAC is the term used for heating, ventilation and air conditioning.

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Sample Template Preview


This Lease is made this ______ day of __________ (Month), _____ (Year) by and between _________________________________________________ (hereinafter “Landlord”) and ________________________________________________ (hereinafter “Tenant”).  In consideration for the mutual promises and covenants contained herein, and for other good and valuable consideration, the parties hereby agree as follows:

1.  The Landlord leases to the Tenant, and the Tenant rents from the Landlord the following described premises: __________________________________________________________________________________________________________________________________________________________________________________________________________________

2.  The term of the Lease shall be for _____________________________ commencing ______________________ and ending ______________________.

3.  The Tenant shall pay to Landlord as rent $____________ per year in equal monthly installments of $ _________ payable in advance ___________________ (Time Period).

4.  This Lease is subject to all present or future mortgages affecting the premises.

5.  Tenant shall use and occupy the premises only as a _________________________ (Tenant Rental Status) subject at all times to the approval of the Landlord.

6.  The Tenant shall not make any alterations, additions or improvements to the premises without the prior written consent of the Landlord.

7.  The Landlord, at his own expense, shall furnish the following utilities or amenities for the benefit of the Tenant: _____________________________________________
___________________________________________________________________ ___________________________________________________________________.

8.  The Tenant, at his own expense, shall furnish the following: ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________

9.  The Tenant shall purchase at his own expense public liability insurance in the amount of  $ _________________ as well as fire and hazard insurance in the amount of $ _____________ for the premises and shall provide satisfactory evidence thereof to the Landlord and shall continue same in force and effect throughout the Lease term hereof.

10.  The Tenant shall not permit or commit waste to the premises.

11.  The Tenant shall comply with all rules, regulations, ordinances codes and laws of all governmental authorities having jurisdiction over the premises.

12.  The Tenant shall not permit or engage in any activity which will effect an increase in the rate of insurance for the Building in which the premises is contained nor shall the Tenant permit or commit any nuisance thereon.

13.  The Tenant shall not sublet or assign the premises nor allow any other person or business to use or occupy the premises without the prior written consent of the Landlord, which consent may not be unreasonably withheld.

14.  At the end of the term of this Lease, the Tenant shall surrender and deliver up the premises in the same condition (subject to any additions, alterations or improvements, if any) as presently exists, reasonable wear and tear excluded.
15.  Upon default in any term or condition of this Lease, the Landlord shall have the right to undertake any or all other remedies permitted by Law.

16.  This Lease shall be binding upon, and inure to the benefit of, the parties, their heirs, successors, and assigns.

Signed this _______ day of ________________ (Month) ________ (Year).

_____________________________    _____________________________
Tenant    Landlord