For the last three years, Nashville has made the list of the top real estate markets in the country. That is good for investors and property owners, but it also means increased competition.
In such an environment, landlords must put their best foot forward but also take steps to protect their investment. This starts with thorough commercial rental contracts.
This article covers five essential clauses to include in commercial lease agreements. Keep reading to find out how to put together commercial property lease terms that will protect your business and establish solid tenant relationships from the start.
1. Rent Amount and Lease Length
Let's start basic lease agreement clauses. Two of the most important ones are monthly rent amounts and how long the lease lasts, such as one year.
You should specify a payment schedule, including which day of the month rent is due. You should also state if there are any associated late fees for missed payments.
2. Appropriate Use of the Property
Next, you should include in commercial lease agreements what types of business operations are permissible in the rental space. It is best to be as specific as possible.
Start by identifying the types of business, such as retail, restaurant, or office space leases. Depending on the nature of the business, you should identify items or activities that are not permitted. These might include things like storing hazardous materials.
You can restrict hours of operation and the type of signage a business can display. Also, include any specific building code or health regulations that apply to the building.
3. Maintenance and Repair Responsibilities
The lease must state that the tenant must keep the space clean and avoid any damage beyond regular wear and tear. It should also state how often landlord inspections will take place.
Also, indicate if the renter or the landlord is responsible for repairs of major systems. These include plumbing, electrical, HVAC, or roofing.
You can also specify whether the tenant must paint or maintain other parts of the property during the lease period. Examples include electrical fixtures, doors, or windows.
4. Default and Termination
Include clauses that outline conditions that could lead to termination by either party before the lease duration is reached. These could include things like failure to pay rent or significant damage to the property. It also should spell out specific requirements regarding notice of lease termination.
5. Dispute Resolution
Finally, include in the lease agreement verbiage that outlines how disagreements between the landlord and tenants should be handled. A good example is mandatory informal conflict resolution before litigation or binding arbitration is sought. This provides some alternatives where disputes can be worked out without having to resort to costly legal resolutions.
Learn More About Commercial Lease Agreements
Now that you know five essential clauses for commercial lease agreements, you can be sure you have covered all the bases. Doing so will protect your property and business interests.
PMI Middle TN is a residential and commercial property management company serving Nashville and all of Sumner County. We offer a variety of services, including advice on business lease essentials. Reach out to us today to learn more.
