Commercial Lease Agreement Related Questions

A commercial lease is a kind of lease that is created when a landlord decides to lease property to be used primarily for business purposes. A commercial lease would cover items such as taxes, security deposits, expenses, obligations for repairs, construction of the premises to be leased, and so on. This kind of lease can also be called a business lease.

Listed below are a few questions answered by real estate lawyers on commercial leases.

Does a commercial lease have to extend for a certain period of time or can it be a month-to-month lease?

There is nothing in the law that prohibits a commercial lease from being a month-to-month lease. A lease that doesn't stipulate a fixed term or a lease decided by verbal agreement to extend beyond a year should be considered a month-to-month lease.

I am about to sign a commercial lease for a property that needs repair in terms of cleaning dirty walls, carpets and so on. Do I need to submit a request for repair in writing? What is the form that I need to fill in?

You should create a separate sheet entitled “Repair Addendum” and list the items that need to be repaired. This document would begin by saying the landlord agrees to make these repairs subject to the tenant’s satisfaction an agreed-upon number of days before the tenant will take occupancy and before the first rent payment is due. The document then states all the repairs, per the list. The paper then would be signed by both the tenant and the landlord, would be physically attached to the lease, would become a part of the lease.

I broke my commercial lease and am responsible for it for the next two years. What can I do now?

If your landlord does not agree to you buying out or paying a penalty, you could try and find another person to take over the lease. The landlord would also need to try and find a new tenant. He/she can’t let the property sit empty and then sue you for the rest of the lease. If either of you find a replacement tenant, your liability would only extend to the time the property is idle, in addition to any other costs the landlord had to bear in finding a new tenant.

I am the sole proprietor of a business and personally guaranteed a commercial lease for the property. I’d like to sell the business now but I would still end up remaining on the lease by default. If the new owner with her co-signer now defaults on the lease, will they be sued first or would I be?

In the event that the new owner defaults, the landlord would go after all parties. He/she would sue everyone on the lease at the same time.

Do I need a lawyer to review a commercial lease and how much would they usually charge?

The law doesn’t require that a lawyer review the lease but unless you have experience with commercial leases, it is sensible to hire a lawyer to go through it. There are many clever provisions in commercial leases that may be put into a landlord’s form contract. The tenant can ask to get these clauses removed if they know about it. An experienced real estate attorney can help you with this and may charge from between $250 - $500/hour.

Commercial lease have a variety of options that can benefit the landlord and the tenant. One of the most common ones is the option to renew. This kind of option lays out the length of the renewal term, the date by which the tenant needs to notify the landlord of the decision to renew and the way in which future rent will be decided upon. By adding a notification date, the landlord gets advance warning if he needs to find a replacement tenant, and the tenant can establish a business plan. Also, the provision for calculating future rent helps both parties to plan budgets.