Types of commercial leases
When creating a commercial lease form, it is beneficial to understand the various types of commercial leases that exist. We offer templates for both comprehensive and standard Commercial Lease Agreements.
Additionally, there are various types of leases, each with different 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 written on a gross basis. 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 certain additional costs, such as operating expenses, 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, in addition to 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.
Key components in a Commercial Lease Agreement
The main sections of a Commercial Lease Agreement cover essential details that define the terms of the rental relationship between a landlord and tenant. LawDepot’s questionnaire prompts you to include the following components, ensuring your document is complete and tailored to your needs:
1. Property and permitted use
Include the property’s details—such as the type (office, retail, or industrial), address, and an optional description—to clearly identify what’s being leased.
Then, define the permitted use of the space and any operating restrictions, such as parking, pets, or whether the landlord can rent to competing businesses.
2. Term, options, and assignment
Specify the lease structure, including whether it’s fixed term, month‑to‑month, or year‑to‑year, and identify the start and end dates. You can also outline options such as early possession, renewal, or purchase rights, as well as the rules governing assignment or subletting.
3. Rent, costs, and deposits
Detail the rent type (gross, net, or triple net), the payment amount and frequency, and any additional terms for late fees, rent increases, or security deposits. Clarify how utilities, insurance, and other operating costs will be divided between the landlord and tenant.
4. Parties, responsibilities, and improvements
List both the landlord’s and tenant’s details, including business or operating names, and add any guarantor information if required.
Next, describe responsibilities for property improvements, any movable property provided by the landlord, inspection reports, and how legal costs will be handled in disputes.
5. Enforcement, notices, and signing
Set out the procedures for enforcing the lease and handling defaults, including required notice periods before eviction or other remedies.
Finish with the execution details, indicating when the lease takes effect and how the final document will be signed and completed.
Types of lease terms for commercial purposes
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 during the term unless the lease specifically allows it. The lease could become a month-to-month lease after the term expires, depending on the laws of your jurisdiction.
Periodic (month-to-month or year-to-year)
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.
Landlord and tenant responsibilities in Commercial Lease Agreements
Generally, landlords manage the building’s structure and major systems, while tenants maintain the rental property's interior and handle daily operational expenses.
However, the exact division of responsibilities depends on the lease terms and the type of property being rented.
Typical landlord responsibilities
- Structural and building maintenance: Landlords usually oversee the roof, exterior walls, foundation, and key systems (e.g.,plumbing, HVAC, elevators, and electrical).
- Common areas and legal compliance: They’re also responsible for maintaining shared spaces (e.g., parking lots, hallways, and lobbies), ensuring the property complies with safety and building regulations, and providing tenants with quiet enjoyment and basic security.
Typical tenant responsibilities
- Interior maintenance and upkeep: Tenants typically maintain the leased interior (e.g., non-structural walls, floors, and finishes). They’re also responsible for cleaning, waste removal, and keeping the premises in good condition throughout the lease term.
- Operational costs and compliance: Tenants must pay rent and operating expenses—such as taxes, insurance, maintenance, and utilities—under the agreed lease structure. They also need to comply with health and safety standards, report property damage, and seek consent before making any alterations.
Important terms and mitigating risks in commercial leases
Several key clauses in a Commercial Lease Agreement can help maintain a relationship between a landlord and tenant. Understanding these areas and customizing them through LawDepot’s guided questionnaire helps both parties manage potential disputes and clarify who holds responsibility before signing.
