A commercial lease is when a building or land is rented for business purposes. It is similar to a residential lease but often longer and with more maintenance responsibilities. The lease is created in writing and signed by both parties. Commercial leases are often longer than 10 years and tenants may be responsible for general upkeep. Renewal options may also be included in the lease agreement.
When a building, portion of a building or land is rented or leased for the purpose of conducting business, it is referred to as a commercial lease. In most jurisdictions, a business lease is very similar to a residential lease. The predominant differences in a business lease are that they tend to be for a longer period of time and the tenant may be responsible for more maintenance and upkeep than with a residential lease.
In most jurisdictions, a business lease is created by the parties agreeing the terms of the lease and reducing them in writing in the form of a lease agreement. The exact requirements for a lease vary by jurisdiction; however, in most cases, some basic terms are required, such as length of lease, monthly rent, and a section on who is responsible for repairs or maintenance. Both parties must sign the agreement, often before a notary.
While a residential lease typically lasts a year or less, a business lease often has a lease term of two years or more. In fact, many business leases are longer than 10 years. From the landlord’s perspective, securing a long-term tenant ensures that he or she has income from the property over a longer period of time without having to worry about re-renting the property. From the tenant’s perspective, once the business has started, having to move premises can be detrimental, if not fatal, to the success of the business, making a longer rental period advantageous.
Aside from the length of the lease, another typical difference between a residential and commercial lease is that a commercial tenant is often responsible for general upkeep. On the other hand, a tenant is also often authorized to make repairs or improvements to the property, such as painting, remodeling, or even building a structure on the property. which a tenant usually cannot do. Because a business tenant often has members of the public in the facility on a regular basis, many landlords require that the tenant be responsible for maintenance or repairs, as heavy traffic is likely to cause more damage than a residential lease arrangement.
A business lease may also contemplate a renewal in the original lease, unlike a residential lease. In some jurisdictions, there is an automatic right to renew in the absence of a good reason not to do so on the part of the owner. A business lease will commonly include a section in the lease agreement that gives the tenant the first right to renovate or re-lease the property upon termination of the lease.
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