Free Commercial Sublease Agreement

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Free Commercial Sublease Agreement

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Commercial Sublease Agreement

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Your Commercial Sublease Agreement

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COMMERCIAL SUBLEASE AGREEMENT

THIS SUBLEASE dated this ________ day of ________________, ________

BETWEEN:

____________________
(the "Sublandlord")

OF THE FIRST PART

- AND -

____________________
(the "Subtenant")

OF THE SECOND PART

Background

  1. This is an agreement (the "Sublease") to sublet real property according to the terms specified below.
  2. The master lease (the "Master Lease") is dated September 17, 2021 and is between ____________________ (the "Landlord") and the Sublandlord with respect to the following lands and any improvements on those lands (the "Premises"): __________________________________________________________________________
    __________________________________________________________________________
    __________________________________________________________________________
    __________________________________________________________________________
  3. The Subtenant is willing to undertake certain obligations of the Master Lease.

IN CONSIDERATION OF the Sublandlord subletting and the Subtenant renting the Subleased Premises, both parties agree to keep, perform and fulfill the promises, conditions and agreements below:

  1. Subleased Premises
  2. The Sublandlord leases to the Subtenant all of the Premises (the "Subleased Premises").
  3. Term
  4. The term (the "Term") of this Sublease commences at 12:00 noon on September 17, 2021 and ends at 12:00 noon on September 18, 2021.
  5. The provisions of this Sublease are subject to the terms and restrictions of the Master Lease.
  6. Rent
  7. The amount of rent and the conditions of payment are the same as under the Master Lease.
  8. The Subtenant will deliver or send the rent to the Sublandlord at ____________________________________________________________
  9. Use of Subleased Premises
  10. Except as otherwise provided in this Sublease, the Subtenant and the agents and employees of the Subtenant will only use the Subleased Premises for a purpose consistent with the permitted use allowed in the Master Lease. Further, the Subtenant agrees to comply with all other applicable provisions of the Master Lease, and will not do anything that would constitute a violation of any part or condition of the Master Lease.
  11. Utilities
  12. All payments for utilities and other charges connected with the Subleased Premises, which are to be paid by the Sublandlord under the Master Lease, will be paid by the Subtenant during the Term of this Sublease.
  13. All payments for utilities and other similar charges for the Subleased Premises are included in the Rent.
  14. Maintenance and Repairs
  15. The Subtenant agrees to surrender and deliver to the Sublandlord the Subleased Premises and all furniture and decorations within the Subleased Premises in as good a condition as they were at the beginning of the Term, reasonable wear and tear excepted.  The Subtenant will be liable to the Sublandlord and the Landlord for any damages occurring to the Subleased Premises or the contents of the Subleased Premises or to the building which are done by the Subtenant or the Subtenant's guests.
  16. The Subtenant will immediately report all general maintenance issues and needed repairs to the Sublandlord and the Landlord.
  17. Alterations and Improvements
  18. The Subtenant may not make any alterations or improvements to the Subleased Premises.
  19. Taxes
  20. The Subtenant will pay any privilege, excise and other taxes duly assessed against the business of the Subtenant, the Subleased Premises and any personal property on or about the Subleased Premises. The Subtenant will avoid the assessment of any late fees or penalties.
  21. Event of Default
  22. The Subtenant will default under this Sublease if any one or more of the following events (the "Event of Default") occurs:
    1. The Subtenant fails to pay the Rent to the Sublandlord or any amount of it when due or within any grace period, if any.
    2. The Subtenant fails to perform any of its obligations under this Sublease or any applicable obligation under the Master Lease.
    3. The Subtenant becomes insolvent, commits an act of bankruptcy, becomes bankrupt, takes the benefit of any legislation that may be in force for bankrupt or insolvent debtors, becomes involved in a voluntary or involuntary winding up, dissolution or liquidation proceeding, or if a receiver will be appointed for the affairs of the Subtenant.
    4. The Subtenant abandons the Subleased Premises or any part of the Subleased Premises.
    5. The Subtenant uses the Subleased Premises for any unpermitted or illegal purposes.
    6. The Subtenant fails to commence, diligently pursue, and complete the Subtenant's work to be performed pursuant to this Sublease pertaining to the Subleased Premises.
    7. The Subleased Premises, or any part of the Subleased Premises is completely or partially damaged by fire or other casualty that is due to the Subtenant's negligence, wilful act, or that of the Subtenant's employee, family, agent, or guest.
    8. Any other event of default provided in the Master Lease or the Act.
  23. Remedies
  24. Upon the occurrence of any Event of Default, the Sublandlord has any or all of the following remedies:
    1. Terminate the Sublease upon the greater of any notice required in the Master Lease or the Act and the Term will then immediately become forfeited and void.
    2. The Sublandlord may, but is not obligated to, perform on behalf of the Subtenant, any obligation of this Sublease or the Master Lease which the Subtenant has failed to perform. The Sublandlord may seek redress from the Subtenant for such performance.
    3. The Sublandlord may reenter the Subleased Premises or any part of the Subleased Premises and in the name of the whole repossess and enjoy the same as of its former state anything contained within the Subleased Premises.
    4. Any other remedy provided in the Master Lease or the Act.
  25. No reference to or exercise of any specific right or remedy by the Sublandlord will prejudice or preclude the Sublandlord from any other remedy whether allowed at law or in equity or expressly provided for in this Sublease or the Master Lease. No such remedy will be exclusive or dependent upon any other such remedy, but the Sublandlord may from time to time exercise any one or more of such remedies independently or in combination.
  26. Upon the expiration, termination or cancellation of the Master Lease or this Sublease, all obligations of the parties under this Sublease will be extinguished.
  27. Any improvements remaining on the Subleased Premises upon termination will revert to the Sublandlord and will be free of any encumbrance at the time of such reversion.
  28. Surrender of Premises
  29. At the expiration of the Term of this Sublease, the Subtenant will quit and surrender the Premises in as good a state and condition as they were at the commencement of this Lease, reasonable use and wear and damages by the elements excepted.
  30. Governing Law
  31. It is the intention of the parties to this Sublease that the tenancy created by this Sublease and the performance under this Sublease, and all suits and special proceedings under this Sublease, be construed in accordance with and governed, to the exclusion of the law of any other forum, by the laws of , without regard to the jurisdiction in which any action or special proceeding may be instituted.
  32. Severability
  33. If there is a conflict between any provision of this Sublease and the applicable legislation of  (the "Act"), the Act will prevail and such provisions of the Sublease will be amended or deleted as necessary in order to comply with the Act. Further, any provisions that are required by the Act are incorporated into this Sublease.
  34. In the event that any of the provisions of this Sublease will be held to be invalid or unenforceable in whole or in part, those provisions to the extent enforceable and all other provisions will nevertheless continue to be valid and enforceable as though the invalid or unenforceable parts had not been included in this Sublease and the remaining provisions had been executed by both parties subsequent to the expungement of the invalid provision.
  35. Assignment and Subletting
  36. The Subtenant will not assign, transfer or further sublet the Subleased Premises or any part of the Subleased Premises without the prior written consent of the Sublandlord and the Landlord.
  37. Notices
  38. Unless otherwise specifically provided in this Sublease, all notices from the Subtenant to the Sublandlord will be served or sent to the Sublandlord at the following address:
    ____________________________________________________________
  39. Unless otherwise specifically provided in this Sublease, all notices from the Sublandlord to the Subtenant will be served or sent to the Subtenant at the following address:
    ____________________________________________________________
  40. All notices to be given under this Sublease will be in writing and will be served personally or sent by certified or registered mail.
  41. Master Lease
  42. Except as otherwise expressly provided in this Sublease, the Subtenant will perform all applicable duties and obligations of the Sublandlord under the Master Lease from September 17, 2021 until the end of the Term of this Sublease.
  43. Except as otherwise expressly provided in this Sublease, the Sublandlord will have, as to the Subtenant, all applicable rights and remedies that the Landlord has with respect to the Sublandlord in the Master Lease.
  44. This Sublease contains all of the conditions and terms made between the parties to this Sublease, and may not be modified orally or in any other manner other than by agreement in writing signed by all parties to this Sublease or their respective successors in interest.
  45. This Sublease incorporates and is subject to the Master Lease, a copy of which has been or will be later provided to the Subtenant, and which is incorporated as if it were set out in this Sublease.
  46. General Provisions
  47. In the event of any legal action concerning this Sublease, the losing party will pay to the prevailing party reasonable attorney's fees and court costs to be fixed by the court and such judgment will be entered.
  48. The Sublandlord may enter the Subleased Premises upon 24 hours notice for any of the following reasons:
    1. to inspect the Subleased Premises;
    2. to maintain the Subleased Premises; or
    3. to make repairs that the Sublandlord is obligated to perform.
  49. This Sublease will extend to and be binding upon and inure to the benefit of the respective heirs, executors, administrators, successors and assigns, as the case may be, of each party to this Sublease. All covenants are to be construed as conditions of this Sublease.
  50. All sums payable by the Subtenant to the Sublandlord under any provision of this Sublease will be deemed to be Additional Rent and will be recovered by the Sublandlord as rental arrears.
  51. Where there is more than one Subtenant executing this Sublease, all Subtenants are jointly and severally liable for each other's acts, omissions and liabilities under this Sublease.
  52. The Subtenant will be charged an additional amount of $25.00 for each N.S.F. cheque or cheque returned by the Subtenant's financial institution.
  53. All schedules to this Sublease are incorporated into and form an integral part of this Sublease.
  54. Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Sublease. Words in the singular mean and include the plural and vice versa. Words in the masculine include the feminine and vice versa. The words "Sublandlord" and "Subtenant" as used in this Sublease include the plural as well as the singular; no regard for gender is intended by the language in this Sublease.
  55. This Sublease may be executed in counterparts.
  56. Time is of the essence in this Sublease.
  57. The Sublandlord and the Subtenant have no interest or other rights of ownership in each other. The parties to this Sublease are not agents for each other. Under no circumstances will this Sublease be construed as creating a partnership or joint venture between the parties to this Sublease.
  58. Each signatory to this Sublease acknowledges receipt of an executed copy of this Sublease.
  59. This Sublease will not be valid and binding on the Sublandlord and Subtenant unless and until it has been completely executed by and delivered to both parties and the Landlord has consented to this Sublease.

IN WITNESS WHEREOF  the Sublandlord and the Subtenant have duly affixed their signatures under hand and seal on this ________ day of ________________, ________.



_____________________________
Witness



_____________________________
____________________



_____________________________
Witness



_____________________________
____________________


Consent of Landlord to Sublease

The undersigned, the landlord in the Master Lease of September 17, 2021, hereby acknowledges consent to the foregoing Sublease Agreement. The Landlord will provide both the Sublandlord and the Subtenant with notice of any breach by the Subtenant under the Master Lease.

Dated: __________________, 20____.



_____________________________
Witness



_____________________________
____________________

What is a Commercial Sublease Agreement?

A Commercial Sublease Agreement allows a tenant of a commercial property to lease (or rent) the property to another party. The tenant can sublease the whole property or part of it (e.g. an office or a boutique).

The original tenant becomes the sublandlord once the agreement is in effect and must ensure that the subtenant fulfils the terms and conditions of the Commercial Sublease Agreement.

The Commercial Sublease Agreement outlines the length of the lease, payment amount and methods, and permitted uses of the property. It also contains the sublandlord and subtenant’s contact information.

This document is also known as a:

  • Business sublease agreement
  • Commercial real estate sublease
  • Commercial property sublease
  • Commercial sublease form
  • Commercial sublet agreement

Who are the parties in a Commercial Sublease Agreement?

There are three parties involved in a Commercial Sublease Agreement:

  • Landlord: The landlord is the person who owns or manages the property. The landlord has a lease agreement with the tenant, and the tenant needs the landlord’s consent to sublease the property.
  • Sublandlord: Also known as the head tenant or sublessor, the sublandlord is the party who is renting the property from the landlord and subleasing the space to the subtenant.
  • Subtenant: Also known as the sublessee, the subtenant is the party who rents commercial space from the sublandlord.

How do I write a Commercial Sublease Agreement?

A Commercial Sublease Agreement outlines the details of the agreement and helps minimize any confusion related to the sublease.

Once you have established the terms and conditions of the sublease agreement, use Lawdepot’s Commercial Sublease Agreement template to create a legal document that protects the interests of all parties and provides a mutual understanding.  

1. Provide information about the property

You’ll want to have as much information about the commercial space as possible on hand before drafting your Commercial Sublease Agreement, including:

  • The property’s address
  • Landlord’s name
  • Sublandlord’s name and mailing address
  • Subtenant’s name and mailing address
  • A copy of the original lease
  • The amount for rent and how it will be delivered

You may also want to include the property’s size (in square feet/square metres).

If you include a diagram of the property in the Commercial Sublease Agreement, highlight the property in red and attach it after printing your document.

2. Get the landlord’s consent

Before the sublandlord and subtenant can enter into a Commercial Sublease Agreement, the property’s original landlord must give formal consent.

It’s important that the sublease agreement doesn’t violate the original lease, also known as a master lease. 

LawDepot’s Commercial Sublease Agreement includes a section where the landlord can give their approval of the sublease if they haven’t yet given written consent.

3. The length of the sublease

The length of a Commercial Sublease Agreement can vary. The length of your sublease can be:

  • Fixed-term
  • Week-to-week
  • Month-to-month
  • Year-to-year

Fixed-term

A fixed-term allows the sublandlord and subtenant to know precisely when the sublease will end or need renewal.

If the sublease expires, the parties will have the option of renewing the lease or continuing to sublet on a month-to-month basis under the same rules as the original sublease.

Periodic tenancy

A periodic tenancy (either weekly, monthly, or yearly) continues until one of the parties involved terminates the lease. It provides flexibility for subtenants who are uncertain about how long they’ll need to be in the agreement.

4. Rent Collection

The sublandlord and the sublessor should come to an agreement about the rent details.

Rent details include:

  • Rent amount
  • Frequency of payment
  • Person responsible for collecting the rent (sublessor or lessor)
  • Rent payment location

5. Permitted use of the commercial space

Permitted use refers to the type of business and activities allowed to operate out of the commercial property.

Make sure you have the landlord's consent if your Commercial Sublease Agreement includes a permitted use other than those already stated in the original lease. You also need approval from the landlord if the sublease agreement is in effect and you want to change or expand the permitted use of the property (e.g. providing a service and then expanding to sell products related to that service).

6. Check-in inspections

The sublandlord must provide the subtenant with a Condition Report if performing a check-in inspection at the time of possession.

The check-in inspection form should contain details of the property's condition at the time of the subtenant's possession. It will provide a record of the original state of the property to determine if the subtenant caused any damage to the property during the sublease.

The sublandlord should give the subtenant a reasonable amount of time to complete the check-in inspection form. Between 7 days and 30 days is usually considered suitable depending on the circumstances under which the subtenant will take possession.

7. Additional costs

Damage deposit

The damage deposit, also known as a bond, covers the cost of repairing any damage caused by the subtenant to the property during the tenancy. The damage deposit is paid by the subtenant to the sublandlord at the beginning of the sublease term.

Utilities

Utilities refer to costs like electricity, natural gas, water, sewer, telephone, security, trash/recycling, internet, and cable.

Discuss who will pay for which utilities. It’s possible to include the cost of utilities with the rent or have the subtenant pay them separately.

Insurance

You should make sure to take out insurance for the commercial property. However, the subtenant isn’t required to have insurance if your insurance policy sufficiently covers the property.

8. Modifying the property

The subtenant may want to make modifications to the property. Not only will you need to include details like this in the sublease agreement, but the details will have to comply with the original lease. 

If the subtenant wants to make changes to the property that violate the master lease, it’s possible to have the landlord change the terms of the original lease with a Lease Amendment. 

You can also negotiate a restoration clause if the tenant needs to return the property to its original condition. For instance, will the data cabling for phone and internet need to be removed at the end of the lease? 

9. Signing details

Both the sublandlord and the subtenant must sign the Commercial Sublease Agreement. It’s a good idea to have at least two witnesses also sign it.

Why should I sublease my commercial space?

Outgrowing your current location

Sometimes business is going so well that you have no choice but to move to a different location. You may need to move to a bigger shop that can hold more machinery and equipment, a new warehouse for more storage, or an office space that has room for additional hires.

Flexibility

The terms of a sublease agreement tend to be shorter because part of the original lease has likely already passed when the subtenant and sublandlord sign the sublease agreement.

The first sublease agreement can act as a trial run for future agreements with the same subtenant.

Suppose you plan to renew the original lease with the landlord and continue subletting the property. In that case, you may feel confident having the same subtenant in the space for a longer duration if the subtenant's first sublease agreement went well. On the other hand, a short-term sublease agreement can also act as a natural conclusion to a straining business relationship.

Sharing the cost and saving money

Entering into a commercial sublease agreement is an efficient way to recoup some money.

The subtenant’s lease can contribute towards some or all your financial commitment in the master lease. It is also a good way to share the maintenance and obligations of the property.

Is a Commercial Sublease Agreement legally binding?

Yes. A Commercial Sublease Agreement is legally binding when properly executed. It becomes binding when the sublandlord and subtenant sign the agreement.

One party may seek to enforce specific terms through the court if the other party fails to uphold its end of the agreement. For example, a head tenant may pursue legal action if modifications made to the property violate the sublease agreement's terms.

What are my responsibilities as a sublandlord?

Being a sublandlord comes with responsibilities similar to those of a landlord.

It’s the sublandlord’s responsibility to:

  • Collect rent and pay bills on time
  • Maintain the property
  • Communicate directly with the landlord when necessary
  • Meet the conditions of the master lease and sublease

Australian state and territory legislation:

LawDepot's Commercial Lease Agreement is tailored to meet the governing laws in Australian states and territories, including:

Related Documents:

  • Commercial Lease Agreement: Create a Commercial Rental Agreement between a landlord and tenant for a commercial space.
  • Lease Amendment: Make changes to an existing Tenancy Agreement. The original lease remains in effect but includes the amendments.
  • Lease Assignment: Allow a tenant in an existing lease to transfer the remaining interest in the lease to a third party.
  • Condition Report: Allows landlords (or property managers/subletting tenants) to record the condition of a rental property when a tenant moves in, and again when a tenant moves out.
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