Signing a lease agreement for commercial real estate is a major commitment. Whether you’re a landlord or a tenant, knowing the key terms and clauses in your lease can help protect your interests and prevent costly misunderstandings.
Essential Lease Terms You Should Know
- Rent and Escalations – The base rent and any increases over time, typically tied to inflation or market rates.
- Lease Term – The length of the lease, including options for renewal or termination.
- Security Deposit – The upfront amount required to cover potential damages or non-payment.
- Common Area Maintenance (CAM) Fees – Costs shared among tenants for maintenance, landscaping, and other services.
- Use Clause – Defines what type of business activities are permitted on the premises.
- Exclusivity Clause – Prevents the landlord from renting to direct competitors within the same property.
- Assignment and Subletting – Determines whether and how a tenant can transfer or sublease their space to another party.
Important Clauses to Watch Out For
- Gross vs. Net Lease – A gross lease includes operating expenses in the rent, while a net lease requires tenants to pay additional costs like property taxes and insurance.
- Early Termination and Exit Strategy – Specifies conditions under which a tenant or landlord can break the lease.
- Maintenance and Repairs – Clarifies responsibilities for fixing structural issues, HVAC systems, and daily maintenance.
- Indemnity Clause – Protects one party from legal liability in certain situations.
Get Expert Advice Before Signing
Commercial leases can be complex, and overlooking key clauses could cost you in the long run. If you need help reviewing or negotiating a lease agreement, let’s connect and make sure you’re getting the best deal possible!
Photo by Annika Wischnewsky on Unsplash
