Commercial Lease Agreements
Intellequity, is a business law firm located in Portland, Oregon that can draft or advise on your commercial lease agreement. I am an experienced contract law attorney that can help you navigate the pitfalls of these complicated documents and help minimize the risk that a misunderstanding between the parties will arise; a misunderstanding that could lead to needless and expensive litigation in the courts. Read below for more information on commercial lease agreements and why you should have one in writing for your business.
What is a commercial lease agreement?
Commercial lease agreements outline terms and conditions between a landlord and a commercial tenant for the use of business property.
Businesses will typically enter into these for renting office spaces or other facilities. A commercial lease agreement is a legally binding contract between a landlord (or property owner) and a business (or tenant) that specifies the terms of renting commercial property, like office space, retail space, or warehouse space.
Key elements often found in a commercial lease agreement:
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Premises Description:
A comprehensive description of the property being leased.
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Duration of Lease:
The start and end dates of the lease term.
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Rent:
The amount of rent to be paid, the due dates, along with any provisions for rent increases.
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Security Deposit:
Any security deposit required by the landlord.
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Maintenance and Repairs:
Describes who is responsible for the upkeep and repairs of the property.
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Utility Bills and Other Costs:
Details on which party is responsible for utilities and other operational costs.
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Renewal and Termination Terms:
Specifies under what conditions the lease can be renewed or terminated.
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Insurance Requirements:
The responsibilities for insurance coverage, if required.
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Use of the Premises:
How the tenant is allowed to use the premises.
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Compliance with Law:
An indication that the use of the premises needs to comply with local laws and zoning regulations.
Why do I need a written commercial lease agreement?
Regardless of the type of lease, both short-term and long-term agreements should be in writing to ensure clarity, protect business and legal interests, and prevent future disputes.
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A business should opt for a written lease agreement for multiple reasons:
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Protection of Rights:
A written agreement provides a clear record of the terms the landlord and tenant have agreed upon. This can protect both parties' rights and avoid misunderstandings or disputes in the future.
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Clarity of Terms:
A written lease outlines all obligations, responsibilities, rights, and permissions for both parties. This includes provisions about rent, utilities, repairs, maintenance, insurance, terms of the lease, extent of the leased property, etc.
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Legal Compliance:
A written lease can ensure compliance with local, state, and federal laws related to rental properties and lease contracts.
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Predictability:
A lease agreement gives a tenant control over the property for a specific time period, providing stability and predictability for business planning. It ensures the business will not be evicted or have the rent increased for the term of the lease.
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Dispute Resolution:
A written lease can include a dispute resolution clause, setting out how any disputes will be resolved, like through arbitration or mediation. This can potentially avoid costly and time-consuming legal proceedings.
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Enforceability:
In many jurisdictions, certain contracts need to be in writing to be legally enforceable. A written lease provides evidence of the agreement in a court of law, if ever required.
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Exit Strategy:
A written lease can outline the terms under which the agreement can be terminated or transferred, ensuring clarity for both parties.
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Why should I hire an attorney to create or review a commercial lease agreement?
An attorney can negotiate more favorable terms for length, rental amount or Common Area Maintenance (CAM) charges, subleasing, assignment, or early termination of the lease.
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Hiring an attorney to draft or review a commercial lease agreement is a smart business decision for the following reasons:
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Complexity:
Commercial leases can be complex, filled with legal jargon and terms that may be difficult for a business owner to fully understand. An attorney can explain these terms and help negotiate more favorable conditions.
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Protecting Interests:
An attorney can ensure the lease agreement aligns with the business's requirements and anticipates potential issues. They can negotiate on matters like rent increases, improvements, signage restrictions, termination rights, repair obligations, and more.
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Risk Mitigation:
Attorneys can identify potential pitfalls or liabilities in the lease and work towards eliminating or mitigating them, thus reducing the risk for your business.
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Legal Compliance:
An attorney will ensure the lease agreement adheres to local, state, and federal laws, including those related to commercial real estate and tenant rights.
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Dispute Resolution:
A lawyer can include clauses specifying how to resolve disputes (such as through mediation or arbitration), which can be more efficient and cost-effective than going to court.
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Exit Strategy:
Circumstances can change and the business might want to relocate before the lease term ends.
Like to learn more? Book a low-priced consult above or provide your contact information here!