Commercial Lease Agreement
This Commercial Lease Agreement (the "Lease") is made between [Landlord (legal name and entity type)] ("Landlord"), with an address for notices at [Landlord address for notices and rent], and [Tenant (legal name and entity type)] ("Tenant"), with an address for notices at [Tenant address for notices]. Landlord leases to Tenant, and Tenant leases from Landlord, the space known as [Suite or unit] in the building at [Building address] (the "Building"), containing approximately [Rentable square feet] rentable square feet (the "Premises"), together with the non-exclusive right to use the lobbies, corridors, restrooms, parking areas and other common areas of the Building (the "Common Areas"), on the terms below. Landlord and Tenant are each a "Party" and together the "Parties".
1. Premises; Parking
Tenant accepts the Premises as measured above, and the rentable area shall not be remeasured during the Term except by agreement. Tenant’s pro rata share of the Building for the purposes of this Lease is [Tenant’s pro rata share (%)] percent ("Tenant’s Share"). Tenant may use [Parking spaces] unreserved parking spaces in the Building’s parking area at no additional charge, subject to Landlord’s reasonable rules. Landlord may relocate parking, change the Common Areas and make repairs and improvements to the Building so long as Tenant’s access to and use of the Premises are not materially impaired.
2. Term; Delivery; Renewal
The term of this Lease is [Term (months)] months beginning on [Commencement date] (the "Commencement Date") and ending on the last day of the final month (the "Term"). If Landlord has not completed Landlord’s Work under Section 7 and delivered possession by the Commencement Date, the Commencement Date and the end of the Term move back by the same number of days and rent abates until delivery, which is Tenant’s sole remedy, except that if delivery has not occurred within ninety (90) days after the scheduled date Tenant may terminate by written notice and recover any deposit paid.
Renewal option: [Renewal option]. An option is exercised by written notice to Landlord at least one hundred eighty (180) days before the Term ends, is personal to the original Tenant, and may be exercised only if Tenant is not in default. Fair market rent means the rent Landlord then charges for comparable space in the Building or, if none, the rent agreed by the Parties or set by a broker with ten years’ local experience chosen by both.
3. Base Rent; Late Charges
Tenant shall pay base rent of [Monthly base rent (year one)] per month ("Base Rent") in advance on the first day of each month, without demand or offset, to Landlord at the address above or by electronic transfer as Landlord directs. On each anniversary of the Commencement Date Base Rent increases by [Annual base rent increase (%)] percent over the Base Rent for the preceding year. Base Rent is abated for the first [Free-rent months (or 0)] full calendar months of the Term; if Tenant defaults beyond any cure period during the Term, the abated rent becomes immediately due. Rent for a partial month is prorated.
Any Base Rent or other sum not paid within five (5) days after it is due bears a late charge of five percent (5%) of the amount due, and any amount unpaid thirty (30) days after it is due bears interest at ten percent (10%) per year or the highest rate the law allows, whichever is less. Base Rent, Operating Expense charges and every other sum Tenant owes under this Lease are "Rent".
4. Operating Expenses
This Lease is: [Operating expense structure]. "Operating Expenses" means Landlord’s reasonable costs of operating, maintaining, insuring and repairing the Building and Common Areas, including property taxes, insurance premiums, Common Area utilities and services, repairs, and a management fee of not more than four percent (4%) of gross rents, but excluding capital improvements (except those that reduce Operating Expenses or are required by laws enacted after the Commencement Date, amortized over their useful life), leasing and tenant improvement costs, costs reimbursed by insurance or other tenants, depreciation, debt service and Landlord’s income taxes. Under a triple net structure Tenant pays Tenant’s Share of all Operating Expenses; under a modified gross structure, Tenant’s Share of Operating Expenses other than taxes and insurance; under a full-service structure, nothing. Where a charge applies, Tenant pays Landlord’s estimate, currently [Estimated monthly operating expense charge (or $0)] per month, with Base Rent; within one hundred twenty (120) days after each calendar year Landlord shall deliver a reconciliation of actual costs, Tenant shall pay any shortfall within thirty (30) days, Landlord shall credit any overpayment against the next Rent, and Tenant may examine the supporting records within ninety (90) days after receiving the reconciliation.
5. Security Deposit
On signing, Tenant shall deposit [Security deposit] with Landlord as security for Tenant’s performance (the "Deposit"). Landlord may apply the Deposit to cure any default, and Tenant shall restore it within ten (10) days after notice. The Deposit need not be segregated and bears no interest unless the law of the State of [Governing law (state)] requires it. Landlord shall return the unapplied Deposit within thirty (30) days after the Term ends and Tenant has surrendered the Premises as this Lease requires. Landlord shall transfer the Deposit to any purchaser of the Building and is then released from liability for it.
6. Use; Compliance; Hazardous Materials; Signs
Tenant shall use the Premises only for: [Permitted use], and for no other purpose without Landlord’s written consent. Tenant shall comply with all laws and insurance requirements applicable to its use, obtain its own permits, and not create a nuisance, overload the floors or electrical system, or increase Landlord’s insurance premiums without paying the increase. Tenant shall bring no hazardous materials onto the Premises beyond ordinary office and cleaning supplies used in compliance with law, and shall indemnify Landlord against any contamination Tenant causes. Tenant may install signage at the Premises entrance and on any Building directory in a form Landlord approves and in compliance with sign codes, and shall remove it and repair any damage at the end of the Term.
7. Condition; Landlord’s Work; Improvements; Alterations
Landlord shall perform the following work before the Commencement Date at Landlord’s cost ("Landlord’s Work"): [Landlord’s work before commencement (or "None")]. Except for Landlord’s Work and any latent defect Tenant reports within ninety (90) days, Tenant accepts the Premises in their existing condition. Landlord shall contribute up to [Tenant improvement allowance (or $0)] (the "Allowance") toward Landlord-approved improvements to the Premises, paid within thirty (30) days after Tenant delivers invoices, lien waivers and a certificate of completion; costs above the Allowance are Tenant’s, and any Allowance unused twelve (12) months after the Commencement Date is forfeited. Tenant shall make no other alterations without Landlord’s written consent, not to be unreasonably withheld for non-structural work under ten thousand dollars ($10,000) that does not affect the Building systems or exterior. All work shall be done by licensed and insured contractors, in compliance with law and free of liens, which Tenant shall discharge within twenty (20) days. Alterations become Landlord’s property at the end of the Term, except those Landlord designated for removal when consenting; Tenant may remove its trade fixtures, furniture and equipment, repairing any damage.
8. Maintenance and Repairs; Utilities
Landlord shall maintain the roof, foundation, exterior walls, structure, Common Areas and the Building’s plumbing, electrical, fire-safety and HVAC systems up to their connection to the Premises, with the cost included in Operating Expenses to the extent Section 4 allows. Tenant shall maintain at its cost everything within the Premises, including interior surfaces, doors, glass, lighting, fixtures and any HVAC unit serving only the Premises, and keep the Premises clean and in good repair, ordinary wear and casualty excepted. Tenant shall pay for all utilities, telecommunications and janitorial service furnished to the Premises, directly to the provider or, where not separately metered, to Landlord at cost. Landlord is not liable for utility interruptions it did not cause, but Rent abates if an interruption caused by Landlord makes the Premises unusable for more than five (5) consecutive business days.
9. Assignment and Subletting
Tenant shall not assign this Lease, sublet any part of the Premises or permit any other occupant without Landlord’s prior written consent, which shall not be unreasonably withheld, conditioned or delayed for a transferee whose financial condition and use are reasonably acceptable to Landlord. A transfer of a controlling interest in Tenant, a merger, or a sale of substantially all of Tenant’s assets is an assignment. Tenant remains liable after any transfer, and fifty percent (50%) of any consideration a transferee pays in excess of the Rent, after Tenant’s reasonable transfer costs, belongs to Landlord. Landlord may freely assign this Lease to a purchaser of the Building.
10. Insurance; Indemnity; Waiver of Subrogation
Tenant shall maintain throughout the Term commercial general liability insurance of not less than [Tenant liability insurance limit (per occurrence)] per occurrence naming Landlord and its lender as additional insureds, property insurance on Tenant’s fixtures, equipment, inventory and alterations for full replacement cost, business interruption insurance, and workers’ compensation as the law requires, with insurers rated A- or better, on a primary and non-contributory basis, with thirty (30) days’ notice of cancellation to Landlord; certificates are due before possession and on each renewal. Landlord shall insure the Building and the Common Areas, with the cost an Operating Expense. Tenant shall indemnify, defend and hold Landlord harmless from all claims and expenses, including reasonable attorney fees, arising from Tenant’s use of the Premises or the acts of Tenant, its employees, contractors or invitees, except to the extent caused by Landlord’s negligence or willful misconduct. Each Party waives every claim against the other for property damage that is or would be covered by the property insurance it is required to carry, and shall have its insurer waive subrogation.
11. Damage; Condemnation
If the Premises are damaged by casualty and can be restored within one hundred eighty (180) days, Landlord shall restore them and Rent abates in proportion to the unusable area until restoration is complete. If restoration would take longer, or the damage occurs in the last twelve (12) months of the Term, either Party may terminate by written notice within thirty (30) days after the casualty. Landlord need not restore Tenant’s alterations or property. If all of the Premises, or so much that the rest is unusable for Tenant’s purpose, is taken by eminent domain, this Lease ends on the date of taking; if less is taken, Rent is reduced proportionately. The award belongs to Landlord, except that Tenant may claim separately for moving expenses and trade fixtures.
12. Default; Remedies
Tenant is in default if it fails to pay Rent within five (5) days after written notice that it is past due; fails to perform any other obligation within thirty (30) days after written notice, or such longer period as is reasonably needed if Tenant begins to cure promptly and pursues it diligently; abandons the Premises; transfers in breach of Section 9; or becomes the subject of a bankruptcy proceeding not dismissed within sixty (60) days. On default Landlord may, in addition to every other remedy: terminate this Lease or Tenant’s right of possession by written notice; recover the Premises by legal process; re-let them on reasonable terms; and recover all unpaid Rent, the costs of recovering and re-letting the Premises, and the amount by which Rent for the balance of the Term exceeds the rent obtained on re-letting, discounted to present value. Landlord shall use reasonable efforts to re-let where the law of the State of [Governing law (state)] requires. Landlord is in default if it fails to perform any obligation within thirty (30) days after written notice from Tenant, who may then pursue its remedies at law but shall not withhold Rent except as a court orders. The prevailing Party in any action under this Lease is entitled to reasonable attorney fees and costs.
13. Surrender; Holdover
At the end of the Term Tenant shall surrender the Premises broom clean and in good condition, ordinary wear and casualty excepted, remove its property, signs and any alterations designated for removal, repair damage caused by removal, and return all keys and access cards; property left behind is deemed abandoned. If Tenant remains in possession after the Term without Landlord’s written consent, Tenant is a tenant at sufferance, Base Rent is one hundred fifty percent (150%) of the last monthly Base Rent, and after thirty (30) days Tenant is liable for any damages Landlord suffers, including claims by a succeeding tenant.
14. Subordination; Estoppel; Access; Quiet Enjoyment
This Lease is subordinate to any mortgage on the Building, provided the lender agrees in writing not to disturb Tenant’s possession while Tenant is not in default. Within ten (10) business days after request Tenant shall sign an estoppel certificate confirming the status of this Lease and a subordination agreement in a lender’s reasonable form. Landlord may enter the Premises on reasonable notice, and without notice in an emergency, to inspect, repair, and show the Premises to lenders, purchasers and, in the last nine (9) months of the Term, prospective tenants. So long as Tenant pays Rent and performs its obligations, Tenant shall peaceably hold the Premises for the Term without disturbance by Landlord or anyone claiming through Landlord.
15. Disclosures; Notices; General
Landlord shall deliver any disclosure the law of the State of [Governing law (state)] requires for a commercial lease. Notices shall be in writing and are effective on personal delivery, on delivery by overnight courier to the addresses above, or on delivery by email to the addresses in the execution record with a copy sent by another method within two (2) business days.
This Lease is governed by the laws of the State of [Governing law (state)]. It, with its exhibits, is the entire agreement between the Parties about the Premises and supersedes all prior proposals and letters of intent; it may be amended only in a writing signed by both Parties. If any provision is unenforceable, the remainder stays in effect. No waiver is effective unless in writing, and acceptance of Rent is not a waiver of a prior default. Time is of the essence. Each signer represents that they are authorized to bind the Party for whom they sign. This Lease may be signed electronically and in counterparts, each an original and together one instrument, and the electronic execution record kept by the signing platform is conclusive evidence of execution.
Signatures
Landlord · Tenant