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What should I know about commercial lease agreements?

On Behalf of | May 14, 2020 | Commercial Real Estate, Real Estate Transactions |

Leases are legally binding contracts between a landlord and tenant for the rental of a property. While residential leases and commercial leases both serve this general purpose, they can be very different. One of the main differences is that while residential leases are similar to each other and often include boilerplate language, commercial leases tend to differ significantly depending on the terms negotiated by both parties. Because of these complexities, consulting with a commercial real estate attorney may be beneficial before you sign your commercial lease.

Commercial Leases Differ from Residential Leases

Florida’s consumer protection laws tend to protect residential renters against landlords, as the law assumes that the average person does not know much about contract and real estate law. However, there is far less protect for business persons, who are assumed to be more knowledgeable about legal issues.

Also, residential tenants generally have little room for negotiation, as most residents have similar needs. Commercial landlords, however, are often willing to negotiate with their tenants, as each tenant’s business is different and will require different accommodations.

Finally, commercial leases tend to last several years, while most residential leases are for one year or less. This makes it even more important to make sure the terms are to your liking before you sign a commercial lease.

What to Include in a Commercial Lease

As we mentioned, commercial leases will vary from business to business. However, there are some terms that your commercial lease agreement should have, including:

  • Description of the property
  • Rent owed
  • Utility costs
  • Property taxes, insurance and repairs
  • Increases in rent (increases typically occur annually)
  • Security deposit
  • Clause specifying which activities are permitted on the property
  • Length of the lease
  • ADA compliance
  • Exclusivity clause to prevent landlord from renting to a competitor
  • Property improvements/modifications permitted

Commercial leases are more complex and harder to get out of than residential leases. A real estate attorney specializing in commercial property can help negotiate the terms of your lease to avoid future problems with your landlord.