What needs to be included in a commercial lease agreement?

On Behalf of | Mar 4, 2022 | Real Estate Law |

Businesses in southern California need to make many decisions that go beyond simply producing a product or providing a service. One of those decisions is deciding on the proper space for the business. The size, layout, location and many other factors go into making the proper decision. Businesses also need to decide whether they should buy or lease the space they will use. While there are benefits to buying the building, for many businesses it is smarter to lease their space.

Finding the best location and space for the business is important, but the lease agreement itself can be just as important as finding the right space. The lease agreement states much more than simply the amount the business owes for rent each month and governs all of the responsibilities of both the landlord and lessee. Depending on the circumstances, lease agreements can be very complicated and comprehensive, but leases need to contain certain clauses at a minimum.

Required clauses in commercial lease agreements

In addition to stating the monthly rent, the lease needs to state which utilities will be paid by the tenant and which ones will be paid by the landlord. It should also state who is responsible for maintaining the common areas and allowed uses for common areas. It should also state who will pay for build-outs of the rental space and what improvements can be made by the tenant. Leases need to also discuss the length of the lease and the renewal options for the tenant.

Tenants also need to know the insurance coverage they need and if they need to name the landlord as an additional insured. The lease also needs to clearly state how they can use the space and what is prohibited to ensure they can properly run their business in the space they are leasing.

Leasing space is needed for many businesses in California and having a well drafted lease is very important. There may be negotiations between the landlord and tenant prior to finalizing the lease, but before the lease is signed businesses need to understand all the terms and their responsibilities under the lease agreement. Experienced attorneys understand what businesses need in leases and may be a useful resource.

 

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