Commercial leases are far more complicated than the average residential lease, and they are much more important. A business or individual who enters into a commercial contract does not have most of the same protections that a residential lessee would have. That means that including terms that will protect you and provisions that truly embody the agreement between the parties is critical. Below are the must-have elements of a commercial lease agreement in New York.
The lease agreement should contain a specific description of the property. The description might also include outbuildings, parking lots, or other areas that may extend beyond the primary real estate as well. Some explanation of common areas or portions that will be shared with others may also be warranted.
Commercial leases are often longer than residential rentals; many last for several years at a time. A valid business lease will include the time period of the contract, information regarding how to renew the lease, and specific provisions on how either party may be able to stop the lease early.
The most common term in a commercial lease is the amount of rent owed to the lessor (or property owner). The contract will also specify when rent is due and how it should be paid. Some commercial leases, for example, will include only an annual payment instead of a month-to-month rental obligation, which would be typical in a residential lease.
Additional terms regarding what the rental payment will cover should be included as well. Some property owners expect the lessee to do their own maintenance while others will insist on performing maintenance themselves. Payment obligations regarding utilities and general upkeep should also be addressed in the lease.
The lease agreement should set out who owns the property and who will be leasing the property. While this portion may seem straightforward, it can become more complicated in a commercial lease. For example, the entity that owns the property may not be the same as the entity that manages or maintains the real estate. All of the parties involved should be listed and defined in the commercial lease agreement.
There may also be restrictions on whether a lessee can assign the lease to others as well. A commercial lease can be both an asset and a liability—whether you have the right to assign it or otherwise transfer the contract can affect your business in the future. Given that commercial leases are often long, knowing and understanding transfer rights is particularly important.
While it may be tempting to simply download a template commercial lease online and use that for your lease relationship—Don’t! Those templates do not address your unique needs as a lessee or a lessor. Instead, contact the legal team at Bergstein Flynn & Knowlton PLLC. We can help you create a commercial lease that fits the relationship between the parties. Please contact us today for further information.