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Considerations when drafting commercial leases

Commercial real estate ventures can take multiple forms. For example, the owner of a commercial property might seek to enter into a commercial lease with a tenant. For the property owner to make the most of its commercial space, the commercial lease is very important. Depending on the property and the needs of a tenant, leases might vary greatly from property to property. There are several different forms a commercial lease might take. 

The first is a triple net lease. With this type of lease, in addition to rent, a tenant also covers the costs associated with repairs, taxes, insurance and utilities. The second type of lease is a double net lease. Under this kind of lease a tenant would pay property taxes and insurance in addition to the rent. Next, the landlord and tenant might enter into a net lease. A net lease requires that a tenant pays for repairs, taxes, insurance, utilities and rent. Last, under a gross lease, the tenant covers rent which is usually higher in rate, while the landlords covers repairs, taxes, insurance and utilities.

Determining the type of lease that will be utilized is one of multiple matters that need to be addressed. The length of the lease will also need to be determined as will the amount a tenant will pay for a space. Other matters that may be negotiated include build-outs that a tenant requires to use the space. In most cases a property owner wants to remain in control of what is done to its property so specifics regarding the improvements, how the improvements will be paid for and whether the tenant will remove them when the lease ends should also be addressed.

To encompass all of these issues in a commercial lease it is usually a good idea to work with a lawyer who has experience with them. That individual could also be of assistance in situations where a breach or other dispute occurs as well.

Source: FindLaw, “Negotiating a Lease for Commercial Real Estate,” Accessed Oct. 14, 2014

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