Understanding Commercial Lease Agreements
A commercial lease agreement is a legally binding contract between a landlord and a business tenant for the rental of commercial property. Unlike residential leases, commercial leases are designed for business purposes and typically involve more complex terms and negotiations.
Key Components of a Commercial Lease:
- Base rent and additional rent (CAM charges)
- Lease term and renewal options
- Permitted use and business operations
- Build-out and improvement provisions
- Maintenance and repair responsibilities
- Insurance and liability requirements
- Signage and advertising rights
- Assignment and subletting provisions
Types of Commercial Leases:
- Gross Lease: Tenant pays flat rent; landlord covers all expenses
- Net Lease: Tenant pays base rent plus property expenses
- Triple Net (NNN): Tenant pays rent, taxes, insurance, and maintenance
- Percentage Lease: Base rent plus percentage of business revenue
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