What to include in a commercial real estate lease

In commercial real estate, a written lease specifies terms that apply to the landlord and the tenant. Leases regulate the relationship between the property owner and the renter and can help resolve disputes.

If you own a commercial property, it is important to understand the terms included in your lease agreements before you rent your space to a tenant.

Lease terms

Commercial real estate leases usually outline the payment terms, including potential penalties for late payments. You can also detail the length of the lease and describe any deposits you require. Many commercial real estate leases contain use clauses that limit businesses’ activities. Local zoning laws restrict which businesses you can allow. Furthermore, as a property owner, you may want to prohibit certain conduct or limit competition between your tenants.

You can also include terms regarding crediting tenants for improvements to the property. For example, your tenant may want to add features or redesign a space. If you approve of these changes, you can provide reimbursement to your tenant and help them pay for the work.

Resolving conflict

You can use your lease to prevent and resolve issues with your tenants. For example, you should detail the procedure for handling repairs and property damage. You can also outline your rules regarding vacancies and sub-leasing. Finally, it is important for commercial property owners to include terms to evict tenants and terminate agreements.

Using a lease can help you define processes and regulate relations between you and the tenants renting your commercial real estate property.