Elements of a Commercial Lease Agreement  

        A commercial lease agreement is a contract that takes place between the owner of a property and a tenant who want to take temporary possession of the property in exchange for monthly payment. This agreement is legal and involves two parties, namely the lessor or the property owner and the lessee or the tenant.

        This lease is completely different from the residential lease as the property in question is used only for business purposes unlike a house. In addition, the lease is usually in a written form, though at times verbal agreements are also done. However, verbal agreements are not recommended because if the matter goes to court for some reason, the court will not be able to verify the contents of the agreement. And therefore, the court will not be able to decide which party is in the wrong.

        The good news is that there is no template or form for a commercial lease agreement. You can use any format as long as the following elements are mentioned in it:

  • Property address: The full address of the property should be mentioned including any other areas like basement, attic, balconies and off-street parking. In addition, make sure that the boundaries of the property are mentioned. This prevents the lessee from trespassing into other people's properties.
  • Start and end date of the lease: The duration of the lease should be mentioned in the agreement. Usually this duration is either done on a yearly basis or is renewed every month. You should also mention any penalty should the lessee decide to terminate the lease before the end of the date mentioned in the agreement.
  • Details of the lessor and lessee: The names and addresses of the lessor and the lessee should be mentioned in the agreement.
  • Conditions: If there are conditions for renting the premises, they should be included. The agreement should also mention what rights the lessee has and this should include privacy. Usually the owner cannot enter the premises without being invited even if he owns the property. This behavior would be taken as trespassing.
  • Payment: The mode of payment and the when the payment will be made should be included. Usually the lessee has to give a security deposit and the payment is made monthly, annually or in advance.
  • Renewal: The lease should have a provision for renewal. That means the time when both parties should start negotiating the renewal should also be mentioned.
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