Basic Commercial Lease Agreement Guidelines

A commercial lease agreement is a contract that legally binds the property owner and the tenant. The lease agreement gives the tenant the right to use the property for commercial purposes for a certain period in exchange for money paid to the property owner.

The lease agreement also provides an outline of rights and responsibilities of both the tenant and the proprietor.

What is the subject of the commercial lease agreement?

Commercial lease agreement involves the lease of real property for commercial purposes. It usually covers the lease of a store, offices, industrial and commercial buildings.

Is there a standard form for Commercial Lease Agreement?

Unlike other contracts, commercial lease agreement has no standard or required form. The law is silent with regard to this aspect. The party can use any form as long as the basic element of the lease agreement are present.

What are the basic elements of commercial lease agreement?

• Property address

• Start and termination dates

• Names of all parties involved including their signatures

• Rental amount and complete detail of all deposits

• The names of the landlord and tenants and other parties involved and their signatures

• Interval of payment

• Provision of lease renewal

What is the difference between commercial leases from a residential lease agreement?

A commercial lease differs from residential lease on its purpose. Commercial lease is used by a tenant to rent space for business purpose while a residential lease is used by a tenant to rent a home or space to reside in. The parties in a commercial lease agreement have a greater negotiating and bargaining power from the parties in a residential lease agreement.

Is oral lease agreement sufficient?

An oral lease agreement is sufficient and valid between the parties. However, it does not bind third persons.

Courts also prohibit oral lease agreement because it is difficult to enforce. In cases of dispute, courts have no reference as to the contents of the agreements.
It is had to determine who the party at fault is.

Is there a maximum period for lease agreement?

The lease agreement may exist for any length of time. It may be for a short period, which will last for a year or less and for a long term to last for three years or more.

A long-term lease tenant is required to pay periodic increases in their monthly rent. The increases are provided as compensation for owner due to rising amount of insurance, property taxes, common maintenance and other utilities.

Parties in a Lease Agreement

A lease agreement has two parties such as,

• The lessor or the property owner

• The lessee or the tenant

The lessor is the owner of the property and the lessee is the one who uses the property for a certain period in exchange for a compensation called rent.

What law governs commercial agreement?

Since commercial lease agreement involves real property, the law of the place where the property is located will governed.

The commercial lease agreement is governed by the law of the place where the property is located, regardless of the jurisdiction of which jurisdiction the property owner and tenant resides.


If you have encountered any legal problems regarding your Commercial Lease Agreement, do hesitate to consult our expert Los Angeles business lawyers. Just log on to our website and fill out our free case evaluation form.