How To Draw Up the Texas Commercial Lease Agreement Correctly
A well-written commercial lease agreement can benefit both the lessor and the lessee by outlining the crucial details of the relationship. Are you a landlord or a business owner who’s wondering how to draw up the Texas commercial lease agreement as effortlessly as possible? Creating any legal document—including a commercial lease—can be challenging, but our guide is here to help you out. Learn which sections your commercial lease agreement should include!
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Commercial Lease Agreement Explained
A commercial lease agreement is a document signed by a property owner and an individual or entity renting the space for business purposes. This contract needs to lay ground rules and outline terms and conditions as well as the rights and duties of both parties.
While your commercial lease agreement doesn’t have to be in writing, verbal contracts aren’t legally enforceable. Both the lessor and lessee can protect their legal rights only if there’s a written lease agreement.
Before you compose the contract, you should learn more about the TX commercial lease types.
Types of Commercial Leases in Texas
There are three main commercial lease types in Texas:
- Net increase
- Percentage increase
- Gross increase
You should find out more about each of these types to determine which one is the best fit for you.
Net Increase Commercial Lease
Other than the base rent, the tenant also covers specific costs related to the operation of the building, known as operating expenses (op/ex). You can choose from three types of net lease, depending on which operating expenses the tenant needs to cover:
| Net Increase Types | Property Taxes | Insurance | Electricity |
| Single net | ✔ | ✘ | ✘ |
| Double net | ✔ | ✔ | ✘ |
| Triple net, also called NNN | ✔ | ✔ | ✔ |
Percentage Increase Commercial Lease
A percentage increase lease requires from the tenant to pay:
- Base rent
- Operating expenses
- Percentage of the monthly revenue
This type of lease is typically signed between a landlord and a retail tenant.
Gross Increase Commercial Lease
By signing a gross increase lease, the tenant agrees to pay a flat annual fee for rent and operating expenses. The landlord estimates the amount that the tenant needs to pay for the op/ex and determines the overall rental rate according to that.
Can You Write the Texas Commercial Lease Agreement by Yourself?
You can compose your commercial lease agreement in Texas on your own, but you’ll probably find this task stressful and time-consuming. Commercial leases include many sections and need to cover various crucial information, which is why you should consider hiring a lawyer. If you miss anything important, the other signing party can take it to his or her advantage.
Should you decide to write a commercial lease agreement on your own, make sure to include the following info:
- Names of the signing parties—start the lease by writing personal and business names of both parties
- Property description and location—mention the type, size, and address of the property
- Lease term—record the date of the beginning and the end of the lease
- Subleasing—spell out whether the tenant can sublease the property in case he or she goes out of business
- Rent amount—establish how much the rent will be and outline the payment schedule
- Late fees—include fees and penalties for the late rent payments
- Security deposit—mention the amount of the security deposit
- Utilities—list the utilities associated with the property and state which party is responsible for them
- Improvements & renovations—spell out who will be responsible for any future improvements and renovations
- Repairs & maintenance—determine who is responsible for repairs and maintenance. While the landlord usually handles repairs, the tenant can be responsible for everyday maintenance tasks
- Dispute resolution—describe how any potential conflict will be resolved
- Signatures—both parties should sign the document in front of a Texas notary
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