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What is a Commercial Lease Agreement?

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What is a Commercial Lease Agreement?

Most businesses don’t own the property where they conduct their business. Instead, they usually rent their business or office space from a commercial real estate owner. The rental agreement between the business and the property owner is known as a commercial lease agreement, which spells out the exact terms of use for the property.

Many commercial leases tend to be flexible due to the shifting nature of business operations. Other lease agreements can be more permanent, especially for businesses that are well-established in their field of operation.

What Does a Commercial Lease Agreement Usually Cover?

A commercial lease agreement will typically cover important issues such as:

  • Identification of the commercial property to be used (exact descriptions)
  • Rental terms (i.e., prices, duration, late fees, etc.)
  • Usage of the property, including installations and trade fixtures
  • Duty to repair the premises
  • Whether the lease can be transferred or sub-leased to another commercial tenant
  • Early termination procedures

Compared to other types of property, such as residential property, the issue of property use is much more central. This is because business zoning laws often define very strictly where "business activity" can and cannot be conducted. For this reason, the commercial lease agreement also needs to be very clear as to what types of activity can take place on the premises during the lease term.

When are Commercial Lease Agreements Necessary?

Commercial lease agreements become necessary any time there is a formal, legal agreement regarding the renting of property for business purposes. The agreement should always be in writing and signed by all parties involved. That way, if a dispute arises, there is a written account of the original agreement between the parties.

What Happens if a Commercial Lease Agreement is Breached?

A breach of commercial lease agreement can create some unexpected hassles for all parties involved. Legal remedies may result for a breach of contract, including a damages award for losses (for instance, to make up for missing monthly payments or other damages).

In other types of breaches, violations of commercial lease agreements can result in other legal actions, such as an eviction of the commercial tenant. This can happen for instance if the property is being used in a way that violates business laws.

Do I Need a Lawyer for Assistance with Commercial Lease Agreements?

A commercial lease agreement is often viewed as an essential aspect of running a business. It’s in your best interests to hire a qualified lawyer if you need assistance with a commercial lease agreement. Your attorney can provide you with the legal advice and guidance that is needed when negotiating a lease agreement. Also, your attorney can represent you in court if you need to have an agreement reviewed or if you have a legal dispute.

Photo of page author Jose Rivera

, LegalMatch Legal Writer

Last Modified: 04-14-2015 12:13 PM PDT

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