Free Commercial Lease Agreement

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Commercial Lease Agreement

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COMMERCIAL LEASE AGREEMENT

THIS LEASE (this "Lease") dated this ________ day of ________________, ________

BETWEEN:

______________________ of _________________________________
Telephone: ______________________  
(the "Landlord")

OF THE FIRST PART


- AND -

______________________ of _________________________________
Telephone: ______________________
(the "Tenant")

OF THE SECOND PART

IN CONSIDERATION OF the Landlord leasing certain premises to the Tenant, the Tenant leasing those premises from the Landlord and the mutual benefits and obligations set forth in this Lease, the receipt and sufficiency of which consideration is hereby acknowledged, the Parties to this Lease (the "Parties") agree as follows:

  1. Definitions
  2. When used in this Lease, the following expressions will have the meanings indicated:
    1. "Additional Rent" means all amounts payable by the Tenant under this Lease except Base Rent, whether or not specifically designated as Additional Rent elsewhere in this Lease;
    2. "Building" means all buildings, improvements, equipment, fixtures, property and facilities from time to time located at ______________________________, as from time to time altered, expanded or reduced by the Landlord in its sole discretion;
    3. "Common Areas and Facilities" mean:
      1. those portions of the Building areas, buildings, improvements, facilities, utilities, equipment and installations in or forming part of the Building which from time to time are not designated or intended by the Landlord to be leased to tenants of the Building including, without limitation, exterior weather walls, roofs, entrances and exits, parking areas, driveways, loading docks and area, storage, mechanical and electrical rooms, areas above and below leasable premises and not included within leasable premises, security and alarm equipment, grassed and landscaped areas, retaining walls and maintenance, cleaning and operating equipment serving the Building; and
      2. those lands, areas, buildings, improvements, facilities, utilities, equipment and installations which serve or are for the useful benefit of the Building, the tenants of the Building or the Landlord and those having business with them, whether or not located within, adjacent to or near the Building and which are designated from time to time by the Landlord as part of the Common Areas and Facilities;
    4. "Leasable Area" means with respect to any rentable premises, the area expressed in square feet of all floor space including floor space of mezzanines, if any, determined, calculated and certified by the Landlord and measured from the exterior face of all exterior walls, doors and windows, including walls, doors and windows separating the rentable premises from enclosed Common Areas and Facilities, if any, and from the center line of all interior walls separating the rentable premises from adjoining rentable premises. There will be no deduction or exclusion for any space occupied by or used for columns, ducts or other structural elements;
    5. "Premises" means the office space at ______________________________.
    6. "Rent" means the total of Base Rent and Additional Rent.
  3. Intent of Lease
  4. It is the intent of this Lease and agreed to by the Parties to this Lease that rent for this Lease will be on a gross rent basis meaning the Tenant will pay the Base Rent and any Additional Rent and the Landlord will be responsible for all other service charges related to the Premises and the operation of the Building save as specifically provided in this Lease to the contrary.
  5. Leased Premises
  6. The Landlord agrees to rent to the Tenant the office space municipally described as ______________________________ (the "Premises").

    The Premises will be used for only the following permitted use (the "Permitted Use"):
    ______________________________________________________________________
                   ______________________________________________________________________

  7. Term
  8. The term of the Lease commences at 12:00 noon on December 7, 2022 and ends at 12:00 noon on December 7, 2027 (the "Term").
  9. Should the Tenant remain in possession of the Premises with the consent of the Landlord after the natural expiration of this Lease, a new tenancy from month to month will be created between the Landlord and the Tenant which will be subject to all the terms and conditions of this Lease but will be terminable upon either party giving one month's notice to the other party.
  10. Rent
  11. Subject to the provisions of this Lease, the Tenant will pay a base rent of $__________, payable per month, for the Premises (the "Base Rent"), without setoff, abatement or deduction. In addition to the Base Rent, the Tenant will pay for any fees or taxes arising from the Tenant's business.
  12. The Tenant will pay the Base Rent on or before the _________________________________________ of each and every month of the Term to the Landlord.
  13. No acceptance by the Landlord of any amount less than the full amount owed will be taken to operate as a waiver by the Landlord for the full amount or in any way to defeat or affect the rights and remedies of the Landlord to pursue the full amount.
  14. Use and Occupation
  15. The Tenant will open the whole of the Premises for business to the public fully fixtured, stocked and staffed on the date of commencement of the Term and throughout the Term, and will continuously occupy and utilize the entire Premises in the active conduct of its business in a reputable manner on such days and during such hours of business as may be determined from time to time by the Landlord.
  16. The Tenant covenants that the Tenant will carry on and conduct its business from time to time carried on upon the Premises in such manner as to comply with all statutes, bylaws, rules and regulations of any federal, state, municipal or other competent authority and will not do anything on or in the Premises in contravention of any of them.
  17. The Tenant covenants that the Tenant will carry on and conduct its business from time to time carried on upon the Premises in such manner as to comply with any statute, including any subordinate legislation, which is in force now or in the future and taking into account any amendment or re-enactment, or any government department, local authority, other public or competent authority or court of competent jurisdiction and of the insurers in relation to the use, occupation and enjoyment of the Building (including in relation to health and safety compliance with the proper practice recommended by all appropriate authorities).
  18. Quiet Enjoyment
  19. The Landlord covenants that on paying the Rent and performing the covenants contained in this Lease, the Tenant will peacefully and quietly have, hold, and enjoy the Premises for the agreed term.
  20. Distress
  21. If and whenever the Tenant is in default in payment of any money, whether hereby expressly reserved or deemed as Rent, or any part of the Rent, the Landlord may, without notice or any form of legal process, enter upon the Premises and seize, remove and sell the Tenant's goods, chattels and equipment from the Premises or seize, remove and sell any goods, chattels and equipment at any place to which the Tenant or any other person may have removed them, in the same manner as if they had remained and been distrained upon the Premises, all notwithstanding any rule of law or equity to the contrary, and the Tenant hereby waives and renounces the benefit of any present or future statute or law limiting or eliminating the Landlord's right of distress.
  22. Overholding
  23. If the Tenant continues to occupy the Premises without the written consent of the Landlord after the expiration or other termination of the Term, then, without any further written agreement, the Tenant will be a month-to-month tenant at a minimum monthly rental equal to twice the Base Rent and subject always to all of the other provisions of this Lease insofar as the same are applicable to a month-to-month tenancy and a tenancy from year to year will not be created by implication of law.
  24. Additional Rights on Reentry
  25. If the Landlord reenters the Premises or terminates this Lease, then:
    1. notwithstanding any such termination or the Term thereby becoming forfeited and void, the provisions of this Lease relating to the consequences of termination will survive;
    2. the Landlord may use such reasonable force as it may deem necessary for the purpose of gaining admittance to and retaking possession of the Premises and the Tenant hereby releases the Landlord from all actions, proceedings, claims and demands whatsoever for and in respect of any such forcible entry or any loss or damage in connection therewith or consequential thereupon;
    3. the Landlord may expel and remove, forcibly, if necessary, the Tenant, those claiming under the Tenant, and their effects, as allowed by law, without being taken or deemed to be guilty of any manner of trespass;
    4. in the event that the Landlord has removed the property of the Tenant, the Landlord may store such property in a public warehouse or at a place selected by the Landlord, at the expense of the Tenant. If the Landlord feels that it is not worth storing such property given its value and the cost to store it, then the Landlord may dispose of such property in its sole discretion and use such funds, if any, towards any indebtedness of the Tenant to the Landlord. The Landlord will not be responsible to the Tenant for the disposal of such property other than to provide any balance of the proceeds to the Tenant after paying any storage costs and any amounts owed by the Tenant to the Landlord;
    5. the Landlord may relet the Premises or any part of the Premises for a term or terms which may be less or greater than the balance of the Term remaining and may grant reasonable concessions in connection with such reletting including any alterations and improvements to the Premises;
    6. after reentry, the Landlord may procure the appointment of a receiver to take possession and collect rents and profits of the business of the Tenant, and, if necessary to collect the rents and profits the receiver may carry on the business of the Tenant and take possession of the personal property used in the business of the Tenant, including inventory, trade fixtures, and furnishings, and use them in the business without compensating the Tenant;
    7. after reentry, the Landlord may terminate the Lease on giving 5 days' written notice of termination to the Tenant. Without this notice, reentry of the Premises by the Landlord or its agents will not terminate this Lease;
    8. the Tenant will pay to the Landlord on demand:
      1. all rent, Additional Rent and other amounts payable under this Lease up to the time of reentry or termination, whichever is later;
      2. reasonable expenses as the Landlord incurs or has incurred in connection with the reentering, terminating, reletting, collecting sums due or payable by the Tenant, realizing upon assets seized; including without limitation, brokerage, fees and expenses and legal fees and disbursements and the expenses of keeping the Premises in good order, repairing the same and preparing them for reletting; and
      3. as liquidated damages for the loss of rent and other income of the Landlord expected to be derived from this Lease during the period which would have constituted the unexpired portion of the Term had it not been terminated, at the option of the Landlord, either:
        1. an amount determined by reducing to present worth at an assumed interest rate of twelve percent (12%) per annum all Base Rent and estimated Additional Rent to become payable during the period which would have constituted the unexpired portion of the Term, such determination to be made by the Landlord, who may make reasonable estimates of when any such other amounts would have become payable and may make such other assumptions of the facts as may be reasonable in the circumstances; or
        2. an amount equal to the Base Rent and estimated Additional Rent for a period of six (6) months.
  26. Upon giving written notice no later than 60 days before the expiration of the Term, the Tenant may renew this Lease for an additional term. All terms of the renewed lease will be the same except for any signing incentives/inducements and this renewal clause.
  27. Utilities and Other Costs
  28. The Landlord is responsible for the payment of the following utilities and other charges in relation to the Premises: electricity, natural gas, water, sewer, telephone, internet and cable.
  29. Insurance
  30. The Tenant is hereby advised and understands that the personal property of the Tenant is not insured by the Landlord for either damage or loss, and the Landlord assumes no liability for any such loss. The Tenant is advised that, if insurance coverage is desired by the Tenant, the Tenant should inquire of Tenant's insurance agent regarding a Tenant's policy of insurance.
  31. Abandonment
  32. If at any time during the Term, the Tenant abandons the Premises or any part of the Premises, the Landlord may, at its option, enter the Premises by any means without being liable for any prosecution for such entering, and without becoming liable to the Tenant for damages or for any payment of any kind whatever, and may, at the Landlord's discretion, as agent for the Tenant, relet the Premises, or any part of the Premises, for the whole or any part of the then unexpired Term, and may receive and collect all rent payable by virtue of such reletting, and, at the Landlord's option, hold the Tenant liable for any difference between the Rent that would have been payable under this Lease during the balance of the unexpired Term, if this Lease had continued in force, and the net rent for such period realized by the Landlord by means of the reletting. If the Landlord's right of reentry is exercised following abandonment of the premises by the Tenant, then the Landlord may consider any personal property belonging to the Tenant and left on the Premises to also have been abandoned, in which case the Landlord may dispose of all such personal property in any manner the Landlord will deem proper and is relieved of all liability for doing so.
  33. Governing Law
  34. It is the intention of the Parties to this Lease that the tenancy created by this Lease and the performance under this Lease, and all suits and special proceedings under this Lease, be construed in accordance with and governed, to the exclusion of the law of any other forum, by the laws of the Commonwealth of Virginia, without regard to the jurisdiction in which any action or special proceeding may be instituted.
  35. Severability
  36. If there is a conflict between any provision of this Lease and the applicable legislation of the Commonwealth of Virginia (the 'Act'), the Act will prevail and such provisions of the Lease 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 Lease.
  37. Assignment and Subletting
  38. The Tenant will not assign this Lease in whole or in part, nor sublet all or any part of the Premises, nor grant any license or part with possession of the Premises or transfer to any other person in whole or in part or any other right or interest under this Lease (except to a parent, subsidiary or affiliate of the Tenant), without the prior written consent of the Landlord in each instance, which consent will not be unreasonably withheld so long as the proposed assignment or sublease complies with the provisions of this Lease.
  39. Notwithstanding any assignment or sublease, the Tenant will remain fully liable on this Lease and will not be released from performing any of the terms, covenants and conditions of this Lease.
  40. If the Lease is assigned or if the Premises or any part of the Premises are sublet or occupied by anyone other than the Tenant, the Landlord may collect rent directly from the assignee, subtenant or occupant, and apply the net amount collected, or the necessary portion of that amount, to the rent owing under this Lease.
  41. The prohibition against assigning or subletting without the consent required by this Lease will be constructed to include a prohibition against any assignment or sublease by operation of law.
  42. The consent by the Landlord to any assignment or sublease will not constitute a waiver of the necessity of such consent to any subsequent assignment or sublease.
  43. Bulk Sale
  44. No bulk sale of goods and assets of the Tenant may take place without first obtaining the written consent of the Landlord, which consent will not be unreasonably withheld so long as the Tenant and the Purchaser are able to provide the Landlord with assurances, in a form satisfactory to the Landlord, that the Tenant’s obligations in this Lease will continue to be performed and respected, in the manner satisfactory to the Landlord, after completion of the said bulk sale.
  45. Care and Use of Premises
  46. The Tenant will promptly notify the Landlord of any damage, or of any situation that may significantly interfere with the normal use of the Premises.
  47. The Tenant will not make (or allow to be made) any noise or nuisance which, in the reasonable opinion of the Landlord, disturbs the comfort or convenience of other tenants.
  48. The Tenant will not engage in any illegal trade or activity on or about the Premises.
  49. The Landlord and Tenant will comply with standards of health, sanitation, fire, housing and safety as required by law.
  50. Surrender of Premises
  51. At the expiration of the lease term, the Tenant 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.
  52. Hazardous Materials
  53. The Tenant will not keep or have on the Premises any article or thing of a dangerous, flammable, or explosive character that might unreasonably increase the danger of fire on the Premises or that might be considered hazardous by any responsible insurance company.
  54. Rules and Regulations
  55. The Tenant will obey all rules and regulations posted by the Landlord regarding the use and care of the Building, parking lot and other common facilities that are provided for the use of the Tenant in and around the Building on the Premises.
  56. General Provisions
  57. Any waiver by the Landlord of any failure by the Tenant to perform or observe the provisions of this Lease will not operate as a waiver of the Landlord's rights under this Lease in respect of any subsequent defaults, breaches or nonperformance and will not defeat or affect in any way the Landlord's rights in respect of any subsequent default or breach.
  58. This Lease 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 Lease. All covenants are to be construed as conditions of this Lease.
  59. All sums payable by the Tenant to the Landlord pursuant to any provision of this Lease will be deemed to be Additional Rent and will be recoverable by the Landlord as rental arrears.
  60. Where there is more than one Tenant executing this Lease, all Tenants are jointly and severally liable for each other's acts, omissions and liabilities pursuant to this Lease.
  61. Time is of the essence in this Lease.
  62. This Lease will constitute the entire agreement between the Landlord and the Tenant. Any prior understanding or representation of any kind preceding the date of this Lease will not be binding on either party to this Lease except to the extent incorporated in this Lease. In particular, no warranties of the Landlord not expressed in this Lease are to be implied.

IN WITNESS WHEREOF the Parties to this Lease have duly affixed their signatures under hand and seal, or by a duly authorized officer under seal, on this ________ day of ________________, ________




______________________________
(Witness)

______________________ (Landlord)

Per:______________________(SEAL)




______________________________
(Witness)

______________________ (Tenant)

Per:______________________(SEAL)

Last updated August 22, 2022

What is a Commercial Lease Agreement?

A Commercial Lease Agreement outlines a landlord’s and tenant’s rights and obligations when the landlord rents out commercial property to a tenant. Either party can be an individual or company. A tenant may also be referred to as a renter or lessee.

The purpose of Commercial Lease Agreements is to establish lease terms so parties are bound to them. It also gives the tenant the right to use the rental property for business purposes during the term of the lease in exchange for payment to the landlord.

A Commercial Lease Agreement is also known as a/an:

  • Business lease agreement
  • Business rental agreement
  • Commercial property lease agreement
  • Commercial real estate lease agreement
  • Commercial lease contract
  • Office lease agreement

If you want to rent out your commercial property but do not have a tenant yet, use our Commercial Lease Application to screen potential tenants.

What properties are commercial?

Generally, commercial real property includes any non-residential real estate, including entire buildings as well as individual units within buildings. The following examples are considered commercial property:

  • Office spaces, including individual office suites or entire office buildings
  • Industrial buildings, such as factories and workshops
  • Retail stores and shops
  • Restaurants, cafes, and commercial kitchens
  • Warehouses and other storage spaces

In the United States, commercial tenancies are governed by landlord-tenant law.

Do I need a Commercial Lease Agreement?

If you are a landlord who owns commercial property and rents it to a tenant, you need a Commercial Lease Agreement. Likewise, if you are a tenant who is renting commercial property and your landlord does not initiate a written contract, consider creating one and presenting it to them.

Having a written contract protects landlords by ensuring that tenants are bound to the terms of their agreement. It is common for landlords and tenants to have disputes, such as disagreeing about who is responsible for repair costs. Without a contract, it is difficult to prove the agreed-upon terms of the tenancy. Having a lease agreement can be extremely helpful if a landlord has to file a legal claim to evict their commercial tenant.

In addition, landlords must outline certain terms, such as whether or not tenants can sublease the rental property to another tenant or whether they need their landlord's consent before subleasing.

A written contract protects tenants by documenting their right to use the rental property for business purposes. A commercial lease also binds landlords to their obligations.

Types of commercial leases

When creating a commercial lease form, it is worth knowing the different types of commercial leases that exist. We offer templates for both comprehensive and standard Commercial Lease Agreements.

In addition, there are varying types of leases when it comes to the costs that tenants are responsible for paying, including gross, net, and triple net leases.

Gross lease

Having a gross lease means the tenant only pays a flat rental fee and the landlord is responsible for all additional operating costs, including property taxes and maintenance costs. Many commercial leases and most residential leases are gross. Under a gross lease, a tenant can still be responsible for some or all utility costs.

Net lease

A net lease means the tenant is responsible for some additional costs, such as certain operating costs, in addition to a fixed rent payment. A net lease is also known as “gross rent plus specified operating costs.” Under a net lease, a tenant may pay some or all of the property taxes, insurance fees, or other operating costs in addition to their rent.

Triple net lease

A triple net lease means the tenant is responsible for all operating costs on top of their rent. A triple net lease is also known as “gross rent plus all operating costs.” Under a triple net lease, a tenant pays all of the costs including property taxes, insurance fees, and repair and maintenance costs in addition to their rent.

What should be included in a Commercial Lease Agreement?

A Commercial Lease Agreement should include information such as:

  • The property’s details, such as the address and legal description of the commercial rental space
  • The permitted use of the rental property and any restrictions placed upon the landlord, such as not leasing to direct competitors in the same building
  • The personal information of the landlord and tenant, such as names and contact information
  • The lease terms, such as the lease type, length, and start and end date
  • Whether or not the tenant can assign or sublease the property
  • The rent details, including the amount, payment frequency, and whether the tenant’s lease will be gross, net, or triple net
  • The responsibility for utilities and insurance payments, such as who is obligated to pay for which expenses
  • Whether the landlord will charge a security deposit and whether they can increase rent
  • Whether the landlord has to make improvements to the property, or whether the tenant can renovate or make improvements to the property

What are the types of lease terms for commercial properties?

When creating a Commercial Lease Agreement, there are different types of terms that you can choose from. Generally, commercial leases are fixed or periodic.

Fixed-term

A fixed-term lease ends on a specific date. The conditions of the lease, including rent, cannot be changed unless the lease specifies. The lease will likely become a month-to-month lease after the term expires, depending on the laws of your jurisdiction.

Periodic

A periodic lease renews automatically every month or year until the tenant or landlord terminates it. A periodic lease is also known as month-to-month or year-to-year. These types of leases offer greater flexibility to both the tenant and the landlord to break the lease, evict the tenant, change the terms, and raise the rent. A landlord can generally increase rent and make changes to the terms if they provide proper notice to the tenant.

What are a commercial landlord's responsibilities?

When leasing an office, retail space, restaurant, or industrial space, landlords may have a variety of responsibilities to keep in mind, including:

  • Checking property specifications: It is up to the landlord to ensure that commercial use is permitted on the property and the property will satisfy the specific type of commercial use for the tenant's activities. For example, one generally cannot operate a restaurant in an office-type building unless very specific building codes and bylaws have been satisfied.
  • Permitting property use: The landlord must decide and permit how the tenant will use the property for their business. If a landlord owns a multi-unit commercial building, they may need to ensure they are not renting out units to similar businesses that are in competition.
  • Deciding the type and length of lease term: Often landlords are the ones who dictate the type and length of commercial leases. The tenant can either pay a percentage of the utilities and operating costs, or a fixed rate on top of their rent. It is up to the landlord to choose the cost distribution, and whether the tenant will pay the landlord or the tenant will pay the utility companies directly.
  • Determining tax obligations: Some landlords require that the tenant pays a share of the property tax. The amount, whether it will be a percentage or a fixed amount, is up to the landlord.
  • Making improvements: Sometimes a tenant will require that certain improvements be made to the property in order to assist them in properly conducting their day-to-day business. If these terms are worked into the lease, a landlord needs to pay for and complete the improvements.
  • Making repairs and maintaining the property: Depending on the terms of a lease, landlords may be responsible for coordinating repairs and maintaining the property. However, sometimes landlords pass these responsibilities to tenants and add these responsibilities into the tenant’s lease agreement.

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