The Ins and Outs of a Commercial Lease Agreement
When you want to rent a business space or a commercial property, you need a commercial lease agreement. This agreement has many types and can be tricky compared to a basic rental agreement. Not to worry—we’ll show you the ropes and provide answers to your questions.
What Is a Commercial Lease Agreement?
A commercial lease agreement is a legal document between a property owner (the lessor) and a business owner (the lessee). Regardless of which side you’re on, a commercial lease is a serious business venture and is typically long-term. You should familiarize yourself with the potential types and terms so that you’re satisfied with the agreement you’re entering into.
Business Lease Agreement Types Explained
Commercial leases have different types. The three most common ones are:
- Gross/full-service lease
- Net lease
- Modified gross/modified net lease
The types differ in the person who bears certain expenses, such as taxes. Check out an overview of all business lease agreement types in the table below:
Types of Commercial Lease Agreements | Key Features |
Gross/full-service lease |
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Modified gross/modified net lease |
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Net lease—single net lease |
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Net lease—double net lease |
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Net lease—triple net lease |
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Net lease—absolute (triple net) lease |
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Percentage lease |
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How Is a Commercial Real Estate Lease Agreement Different From a Residential One?
Aside from the basic difference between commercial and residential lease agreements—the former referring to business and the latter to private rentals—there are a few more important distinctions:
- Term variety—Most landlords use a standard residential lease agreement, but commercial agreements vary greatly depending on the tenants and their businesses
- Duration of leases—The majority of residential leases last for one year, whereas the commercial ones can last for several years
- Negotiability—Commercial lease terms are more negotiable and are subject to change
- Legal protection—Commercial lessors and lessees have less legal protection than the residential ones because the state and consumer laws typically apply to residential leases only
What You Should Know Before Entering Into a Commercial Rental Agreement
Research is key when it comes to commercial rental agreements. Since the agreement is customizable, the more you know, the more it can benefit you. Here are some details you should look into before you negotiate and sign anything:
- Zoning laws
- Environmental laws
- Location of the property
- Landlord and the building owner
- Potential terms of your agreement
What Should a Simple Commercial Lease Agreement Cover?
Check out what most commercial lease agreements should include:
- Full names of the parties
- Description of the property
- Use of the property
- Lease term—usually expressed in months
- Subleasing
- Security deposit
- Rent—the amount, base rent, adjustments, and increases
- Other expenses (e.g., insurance, maintenance, and repairs)
- Landlord access
- Improvements and alterations to the property
- Dispute resolution
- Termination
- Compliance with the Americans with Disabilities Act (ADA)—The property must be accessible to people with disabilities if the business is open to the public and operates with 15 or more employees
DoNotPay Can Draw Up Various Legal Documents for You
Whether you’re the business owner or the property owner, you may need to draft other legal documents besides the commercial lease agreement. Using DoNotPay is the best way to write a contract. No need to Google search different contract templates because we’ll do all the work.
Follow these instructions to create a legal document like a pro:
- Open DoNotPay in a web browser
- Enter the name of the legal document you need
- Provide relevant info by answering a few questions
Our AI-powered app will get down to business and draw up an agreement of your choice in a few minutes. Remember to review your document carefully before signing or notarizing it.
Turn to DoNotPay for More Help With Legal Documents
Our app is a vast database helping you understand and draw up numerous legal documents. The table below shows which documents we can draft for you and which we can break down. DoNotPay’s knowledge base grows every day, so feel free to browse our learning center.
Legal Documents You Can Generate | Legal Documents You Can Learn About |
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