Commercial Lease Agreements

 

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What You Need To Know About Commercial Lease Agreements

Discover smart insights and legal guidance on Commercial Lease Agreements with Perigon Legal Services. Learn about drafting, negotiating, and understanding your commercial lease.

Author: Stan Faulkner, Founder, Perigon Legal Services, LLC

Mr. Faulkner is an experienced counselor and litigator with 15 years of experience, having held bar licenses in four states (Mo, Il, Ct and Ga). Stan Faulkner uses this experience and focuses his skills in the pursuit of assisting individuals in probate (trust and estate) matters, guardianships and conservatorships, estate planning, business disputes and contract disputes. Published on April 03, 2024.

A commercial lease agreement establishes the terms and conditions for renting a commercial space. This legally binding contract is entered into by the property owner and their commercial tenants, delineating the respective responsibilities, rights, and duties of both parties.

Commercial lease agreements specify crucial lease terms, such as rent amount, security deposit, mode of payment, duration of the lease, and maintenance costs. This safeguards both the rental property owner and their tenants. It may also contain additional information on each party’s representations and warranties.

To properly guarantee the well-being of each party, you must be aware of the legal implications of the commercial lease agreement. For this, you would need an experienced legal team. Perigon Legal Services can guide you in making optimal decisions that will work for you and your lease. With almost two decades of legal experience, our approachable and skilled attorneys can help you navigate real estate law.

Understanding Commercial Lease Agreements

 

Commercial lease agreements typically cover rental spaces like stores, office space, or warehouses for business or commercial purposes.

Tenant and landlord rights and obligations are outlined in commercial lease agreements. A commercial lease will generally contain some clauses, including the following:

  • The end-of-term clause outlines the conditions determining when the contract may be terminated.
  • The holding over clause safeguards the landlord’s rights if a tenant remains in the leased premises after the lease expires.
  • The agency and brokerage clause gives the property owner the exclusive right to market and represent the property for a set period of time.

To draft fair, open, and legally compliant contracts, it’s essential to understand the nuances of Georgia commercial lease agreements. These agreements protect all parties’ legal entitlements and goals while outlining their basic terms. Our experienced real estate lawyers at Perigon Legal Services can assist you with your real estate needs.

Types of Commercial Property Leases

The following are a few kinds of leases:

Full Service Gross (FSG) Lease

Here, all building operating costs, including property taxes and insurance, are covered in the rent. The property owner offers cleaning services and other utilities as part of the operational costs.

Gross lease

This is a commercial lease in which the property owner covers maintenance expenses, taxes, and insurance costs. The tenant periodically pays a fixed amount that covers expenses related to property ownership and utilities.

Modified Gross Lease

A lease in which the renter first pays base rent plus a proportionate sum for any additional expenses. A cross between gross and net leases.

Net lease, double net lease, or triple net lease

This type of lease dictates that the tenant must cover all of the fees associated with the property, including rent. A double net lease is an agreement in which the tenant pays the insurance premiums and property taxes. A triple net lease is an agreement where the tenant pays the building insurance, maintenance costs, and real property taxes.

Drafting a Commercial Lease Agreement

 

The process of drafting a sample commercial lease agreement is pretty straightforward. Here are the following steps to guide you:

  1. Determine the property and the involved parties.
  2. Establish the length of stay and the rate of monthly rent.
  3. Discuss how the upkeep and property renovations will be dealt with.
  4. Allocate the business property insurance and real estate taxes.
  5. Add the clauses, conditions, and contingencies.
  6. Get a lawyer to look over your drafted lease.
  7. Examine, review, and sign the contract.

Ideally, leases are customized to fit specific customer circumstances. This is to maximize the benefits from their commercial real estate transactions and their business needs.

Negotiating Commercial Lease Agreements

Landlords typically want to maximize their profit and rent their commercial property with as little trouble as possible. When negotiating, landlords may try to lessen their expenses. However, that can also be said for tenants.

Maximizing profit and minimizing expenses is crucial for tenants who own businesses. Tenants also aim for security and good property maintenance from the owners. A lot of these perspectives from both parties play significant roles in negotiations. It is essential that both parties are heard and protected when negotiating a commercial lease agreement.

The following can help you negotiate a commercial lease:

  • Do your research on the property and related costs.
  • Evaluate what you and your business need.
  • Figure out your leasing choices.
  • Analyze and compare the market rent.
  • Be aware of the lease details.
  • Document the negotiations.
  • Review the end-of-term clause.
  • Think about alternatives for leasing renewal.
  • Negotiate for clauses and provisions favorable to you.
  • Seek legal counsel.
  • Finalize and complete negotiations.

Resolving Disputes in Commercial Leases

A landlord and tenant of commercial properties may end up in court for several reasons. These may result from the tenant’s acts, those of the landlord, those of another tenant, or from the landlord’s inaction in certain circumstances. These could include:

  • Failure to pay rent or when the tenant defaults.
  • Issues regarding property maintenance.
  • Conflict between tenants.

However, issues with your commercial lease agreement can also be reasons for this.

Conflicts over commercial leases can be settled by litigation, mediation, or negotiation. Usually, negotiating a resolution with both sides first is the ideal course of action. However, there are times that it is not always possible. Both parties may consider other options like mediation to resolve their dispute if they are unable to negotiate.

Commercial lease agreement conflicts often get resolved through mediation. A mediator is a neutral third person who leads the discussion and helps the parties identify points of agreement. Before going to court, one should exhaust all other possibilities because it can be expensive.

How Perigon Legal Services Can Help

Regarding commercial lease agreements, attorneys play a crucial role in supporting landlords and tenants. Real estate dispute attorneys ensure that all of such contracts are fair for each party. It’s crucial to understand the terms of the lease and how they impact each party.

Perigon Legal Services strives to provide our customers with the finest possible service. We can assist you in a number of areas, such as real estate law in Georgia, asset protection planning, and will preparation. We prioritize helping our clients go through the necessary legal procedures with ease. Our real estate dispute resolution experience can surely help you win your case.

With more than 15 years of experience, our very own Stan Faulkner has centered his practice on helping clients from the Atlanta area. Contact Perigon Legal Services if you would like to understand Georgia’s real estate law with our guidance.

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