Commercial property leases are crucial agreements that dictate the terms and conditions under which a business can occupy a rented space for its operations. Understanding the intricacies of these leases is essential for both landlords and tenants to ensure a smooth and mutually beneficial arrangement. When considering commercial property for sale Newmarket or any other location, grasping the fundamentals of leases becomes even more imperative.
Types of commercial leases:
Commercial leases come in various forms, each with its own structure, terms, and implications. The most common types of commercial leases include:
Gross lease: In a gross lease, the tenant pays a fixed monthly rent, and the landlord is responsible for covering all property expenses, including taxes, insurance, maintenance, and utilities.
Net lease: In a net lease, the tenant pays a base rent plus a portion of the property expenses, such as taxes, insurance, or maintenance costs. There are several subtypes of net leases, including single net lease, double net lease, and triple net lease, each delineating different responsibilities between landlord and tenant.
Percentage lease: In a percentage lease, the tenant pays a base rent plus a percentage of their gross sales, typically in retail or restaurant spaces. This type of lease is commonly used in shopping centers and malls.
Modified gross lease: A modified gross lease is a hybrid between a gross lease and a net lease, where the tenant pays a fixed rent plus some additional property expenses, with the specific terms negotiated between landlord and tenant.
Key lease terms:
Commercial leases contain several key terms and provisions that outline the rights and responsibilities of both parties. Some of the essential lease terms to understand include:
Rent: The amount of money the tenant agrees to pay the landlord for the use of the property, typically expressed as a monthly or annual rent.
Lease term: The duration of the lease agreement, including the start and end dates, renewal options, and termination provisions.
Security deposit: A refundable deposit paid by the tenant to the landlord as security against damages or lease defaults.
Use clause: Specifies how the tenant is allowed to use the leased space and any restrictions or limitations on its use.
Maintenance and repairs: Defines the respective responsibilities of the landlord and tenant for maintaining and repairing the property, including structural repairs, HVAC maintenance, and common area upkeep.
