Top 5 Commercial Lease Agreements You Should Know

There are different reasons why people use commercial lease agreements. Do you know which types are used? If yes, then good for you, but you have landed on the right page if you need to know about all its types. You can check this post to learn more about the insightful details of the lease.

We have done some detailed research and collected data from multiple sources for the sake of user’s convenience so they don’t have to go anywhere else in search of the correct details as we are here for you with everything you should know about it. We can assure you that you will learn much about this agreement and its different types by the end of this article. 

As a reminder, the operating expenses contain insurance,  Miami commercial cleaning services, property taxes, and maintenance costs.

What is a Commercial Lease Agreement

A lease is a legal agreement that highlights the terms under which one party agrees to rent property owned by another party. A commercial lease contract is a document used to rent an office space or other business property from a landlord. The term ‘commercial’ means that the lease is for business activities instead of housing. 

A commercial tenant can be anyone from a single proprietor with a small, growing business to a primary multinational corporation. Residential leases tend to be the same for all renters, but there are many other commercial leases. When someone breaks, the leases range from mild to damaging, based on the circumstances under which they are broken.

CocoDoc, The Best Commercial Lease Agreement Template Provider

With the help of CocoDoc’s official web page, users can avail different samples of the commercial lease agreement templates. There is more than a single agreement available here for you to check out, and it is up to you which type you need to utilize. This tool is easy to use and helps you know all about the lease basics. 

Top 5 Commercial Lease Agreements

There are many types of commercial lease agreements, but some are most frequently used compared to others. Have a look at the following information to find out which significant types are commonly used. 

Percentage Lease Agreement

In this type of lease, the renter pays rent and a percentage of their monthly gross sales to the property’s owner. The base rent is commonly determined on a per square foot basis, and the percentage will differ from one property owner to the other. This kind of lease model is mostly in shopping centers or strip malls. 

These properties are arranged in a way that is meant to bring in foot traffic to benefit the businesses that are placed there. For instance, a health food store will be cited close to a pilates studio and a fitness clothing retailer. Property owners can need a percentage lease of their renters because of the advantages of inheritance.

Full-Service Lease

This type of lease is sometimes considered a gross lease, and the property owner covers all of the operating expenses interlinked to the unit or space occupied by the renter. This contains insurance, property taxes, and maintenance costs. The renter is accountable for paying rent. At times, a full-service lease will include an “expense stop” that caps the amount a property owner is needed to pay. 

If the operating expenses surpass this expense stop, the renter will be liable for paying them. Most of the property owners account for these operational costs by increasing the rent. However, this kind of lease is inherently a considerable risk for the landlord since there could be unpredictable increases to their day-to-day monthly expenses. 

Net Lease Agreement

In a net lease, the renter is accountable for paying a share of the unit’s operating expenses apart from their monthly rent. As a reminder, here operating expenses contain insurance, property taxes, and maintenance costs. There are four alterations of the net lease:

Single net lease: In a single net lease, the renter is liable for one of the three significant operating costs interlinked with space.

Double net lease: A double net lease specifies that the renter must pay two of the three primary operating costs.

Triple net lease: A triple net lease, also called a net-net-net lease, needs the renter to pay rent plus all the other major three extra expenses.

Absolute lease: In an absolute lease, the tenant deals with rent and all operating expenses, including any repairs to the roof and structure of the building.

Full Renting and Insurance Lease

The renter takes on all of the costs for renovations and insurance for the property being leased from the property owner in this lease. The most common mistake is that here a tenant is supposed to give back the property in the same condition in which they took it in the first place. 

Leveraged and Non-Leveraged Leases

In leveraged and non-leveraged leases, the worth of the property leased may be of an immense amount which may not be easy and logical for the lessor to finance. So, the lessor deals with one more financier who will have charge over the leased assets.

Essential Terms in Commercial Leases

Following are the terms that are being added to a lease. 

• Does the lease term refer to the duration for how long the lease will work? Will it terminate on a specified date or be subject to terms and conditions? Does either the property owner or renter have an option to extend it or cancel it before time?
• The term rent states how much is the base rent? Does it increase at set periods? What are other charges that are added apart from the rent?
• Other costs signify who will pay for items, including building insurance, property taxes, and routine maintenance. 
• Security deposit tells how much is it and when the property owner withholds it?

The lease may also state the permitted uses of the property.

• Permitted use tells that the lease is only for certain commercial activities. The renter may not involve in other kinds of business activities without the permission of the landlord.
• Exclusive use states that the renter gets the exclusive rights to do particular activities within a larger property with different renters.

What Happens when you Break a Lease

When someone breaks the lease, the charges might vary depending on the situations under which they are broken. A renter who breaks a lease without prior negotiation with the property owner encounters a civil lawsuit. 

As a consequence of breaking a lease, a renter may face problems renting a new place, as well as other issues interlinked to having negative entries on a credit report. It is essential for renters who break the lease to negotiate with their landlords or seek legal help. Giving a particular amount of notice or forfeiting the safety deposit lets the renters break their leases without penalties. 

Some leases have early termination clauses that let renters cancel the contracts under a particular set of terms and conditions or when their property owners do not complete their contractual obligations. The terms and conditions of a lease cannot violate state or federal law. 

Final Words

I hope now you have sufficient data to get to know and differentiate between different types of leases. You can now easily download the required template from CocoDoc if you want to file a lease for one reason or another. In case you need any further assistance, then you can get back to us.