Commercial Real Estate Lease Agreement Template

COMMERCIAL REAL ESTATE LEASE AGREEMENT TEMPLATE

This COMMERCIAL REAL ESTATE LEASE AGREEMENT (this "Agreement") is made and entered into as of the Effective Date by and between the parties identified below.

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1. Document Preamble & Recitals

This Agreement is made and entered into as of the Effective Date set forth below (the "Effective Date"), by and between:

LESSOR: [Legal Name of Lessor Entity], a [Type of Entity, e.g., Corporation, LLC] organized under the laws of the State of [Lessor's State of Organization], having its principal place of business at [Lessor's Full Address] (hereinafter "Lessor")

AND

LESSEE: [Legal Name of Lessee Entity], a [Type of Entity, e.g., Corporation, LLC] organized under the laws of the State of [Lessee's State of Organization], having its principal place of business at [Lessee's Full Address] (hereinafter "Lessee")

RECITALS:

WHEREAS, Lessor is the lawful owner of the real property, including any buildings and improvements thereon, situated at the address identified as the Premises below; and

WHEREAS, Lessee desires to lease from Lessor, and Lessor desires to lease to Lessee, the Premises, for the purposes and upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

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2. Operational Definitions

For the purposes of this Agreement, the following capitalized terms shall have the meanings ascribed to them below:

1. "Additional Rent" means all sums, costs, charges, and expenses (other than Base Rent) that Lessee is required to pay under this Agreement, including but not limited to, real estate taxes, insurance premiums, common area maintenance (CAM) charges, utilities, and any other impositions related to the Premises or the Project, as applicable.
2. "Agreement" means this Commercial Real Estate Lease Agreement Template, including all exhibits and addenda attached hereto.
3. "Base Rent" means the fixed monthly rental amount payable by Lessee to Lessor as specified in Section 3.4.1.
4. "Commencement Date" means the date upon which the Lease Term officially begins, which shall be [Date], or such other date as mutually agreed upon in writing by Lessor and Lessee.
5. "Common Areas" means those areas within the Project that are provided by Lessor for the common use or benefit of tenants, their employees, agents, customers, and invitees, including but not limited to, parking facilities, driveways, sidewalks, landscaping, and other amenities.
6. "Effective Date" means [Date], the date this Agreement is entered into by both parties.
7. "Expiration Date" means [Date], or the date this Agreement is otherwise terminated in accordance with its terms.
8. "Force Majeure Event" means any event or circumstance beyond the reasonable control of the affected party, including but not limited to, acts of God, war, terrorism, civil unrest, labor disputes, epidemics, pandemics, government restrictions, embargoes, fire, flood, earthquake, or other natural catastrophes.
9. "Hazardous Materials" means any substance, material, waste, pollutant, or contaminant that is regulated under any Environmental Law, including without limitation, any petroleum product, asbestos, polychlorinated biphenyls, and any toxic, radioactive, ignitable, corrosive, or reactive material.
10. "Improvements" means any and all alterations, additions, or improvements made to the Premises by either Lessor or Lessee, including fixtures, trade fixtures, and leasehold improvements.
11. "Lease Term" means the period commencing on the Commencement Date and ending on the Expiration Date, unless sooner terminated as provided herein.
12. "Lessee" means [Legal Name of Lessee Entity], its permitted successors and assigns.
13. "Lessor" means [Legal Name of Lessor Entity], its permitted successors and assigns.
14. "Permitted Use" means the specific commercial activity or activities for which Lessee is permitted to use the Premises, as described in Section 3.7.
15. "Premises" means the real property, including any buildings and improvements located thereon, described in Section 3.2, which is the subject of this Agreement.
16. "Project" means the entire commercial property, of which the Premises forms a part, located at [Full Street Address of Project, if different or larger than Premises address].
17. "Security Deposit" means the sum paid by Lessee to Lessor as security for the full and faithful performance by Lessee of all its obligations under this Agreement, as specified in Section 3.6.
18. "Total Rent" means the aggregate of Base Rent and Additional Rent payable by Lessee under this Agreement.

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3. Substantive Terms & Obligations

3.1 Grant of Lease

Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, subject to the terms, covenants, and conditions set forth in this Agreement.

3.2 Description of Premises

The Premises consists of approximately [ rentable square feet, or gross square feet] located at [Street Address, Unit/Suite Number, City, County, State, Zip Code], commonly known as [Common Name of Building/Suite, if applicable]. The Premises is legally described as [Legal Description, if available and desired, otherwise omit].

3.3 Lease Term

The Lease Term shall commence on the Commencement Date and shall continue for a period of [Number] ([e.g., three (3)]) years and [Number] ([e.g., zero (0)]) months, terminating automatically on the Expiration Date, unless extended or sooner terminated as provided herein.

3.4 Rent

3.4.1 Base Rent

Lessee shall pay to Lessor a Base Rent of [Dollar Amount] Dollars ([e.g., $5,000.00]) per month, payable in advance on the first (1st) day of each calendar month during the Lease Term, without prior demand, deduction, or set-off.

3.4.2 Additional Rent (Triple Net "NNN" Lease Structure)

This is a Triple Net (NNN) Lease. In addition to Base Rent, Lessee shall pay as Additional Rent: (a) Real Estate Taxes: All real estate taxes, assessments, and governmental charges of every kind and nature whatsoever, ordinary or extraordinary, general or special, foreseen or unforeseen, which may be levied or assessed against the Premises or the Project, or any part thereof, during the Lease Term. (b) Insurance Premiums: All premiums for casualty, property, liability, and other insurance policies covering the Premises and Lessor's interests therein, as required by Lessor in Section 3.10. (c) Common Area Maintenance (CAM) Charges: A proportionate share of the costs of operating, maintaining, and repairing the Common Areas of the Project, including but not limited to, landscaping, parking lot maintenance, snow removal, lighting, security, and management fees. Lessee's proportionate share shall be [Percentage]% of such costs, based on the ratio of the Premises' square footage to the total rentable square footage of the Project. (d) Utilities: All charges for utilities furnished to the Premises, including but not limited to, electricity, gas, water, sewer, trash removal, internet, and telecommunications.

3.4.3 Payment Terms

All payments of Base Rent and Additional Rent shall be made to Lessor at [Lessor's Payment Address or Bank Account Details], or such other address or account as Lessor may designate in writing.

3.4.4 Late Charges

If any installment of Base Rent or Additional Rent is not received by Lessor within [Number] ([e.g., five (5)]) days after its due date, Lessee shall pay a late charge equal to [Percentage]% of the overdue amount or [Dollar Amount] ([e.g., $100.00]), whichever is greater, to compensate Lessor for the administrative costs and inconvenience incurred due to such late payment. This late charge shall be Additional Rent.

3.4.5 Interest on Overdue Amounts

Any amount of Total Rent not paid when due shall bear interest at the rate of [Percentage]% per annum or the maximum legal rate, whichever is less, from the date due until paid.

3.5 Security Deposit

Lessee shall pay to Lessor, upon execution of this Agreement, a Security Deposit in the amount of [Dollar Amount] Dollars ([e.g., $10,000.00]). This Security Deposit shall be held by Lessor without interest (unless otherwise required by law) as security for the faithful performance by Lessee of all terms, covenants, and conditions of this Agreement. The Security Deposit may be applied by Lessor to cure any default by Lessee or to compensate Lessor for any loss or damage sustained by Lessor due to Lessee's breach. The unused portion of the Security Deposit shall be returned to Lessee within [Number] ([e.g., thirty (30)]) days after the Expiration Date, provided Lessee has fully complied with all terms and conditions of this Agreement, including vacating the Premises in the required condition.

3.6 Condition of Premises

Lessee accepts the Premises in its "AS IS" condition on the Commencement Date, acknowledging that Lessor has made no representations or warranties regarding the condition of the Premises or its suitability for Lessee's Permitted Use, except as expressly stated herein. Lessee further acknowledges that it has inspected the Premises and found them to be in good order, condition, and repair.

3.7 Permitted Use

Lessee shall use and occupy the Premises solely for [Specific Permitted Use, e.g., general office space, retail sales of clothing, light manufacturing of widgets] and for no other purpose whatsoever without the prior written consent of Lessor, which consent may be withheld in Lessor’s sole discretion. Lessee shall not use the Premises for any illegal purpose or in any manner that would constitute a nuisance or disturb other tenants or occupants of the Project.

3.8 Maintenance & Repairs

3.8.1 Lessor's Responsibilities

Lessor shall be responsible for structural repairs to the exterior walls, roof, foundation, and major utility lines leading to the Premises (but not within), and the maintenance of Common Areas.

3.8.2 Lessee's Responsibilities

Lessee shall, at its sole cost and expense, maintain the Premises (including all interior portions, non-structural elements, glass, doors, storefront, plumbing, HVAC system, electrical system, and all fixtures and appurtenances within the Premises) in good order, condition, and repair. Lessee shall promptly make all necessary non-structural repairs and replacements. If Lessee fails to make such repairs, Lessor may, after [Number] ([e.g., ten (10)]) days' written notice (except in emergencies, where no notice is required), make the repairs and the cost thereof shall be Additional Rent, payable immediately by Lessee.

3.9 Utilities

Lessee shall be solely responsible for arranging and paying directly for all utility services supplied to the Premises, including but not limited to electricity, gas, water, sewer, internet, and trash removal.

3.10 Insurance

3.10.1 Lessee's Insurance

Lessee shall, at its sole cost and expense, maintain during the entire Lease Term: (a) Commercial General Liability Insurance: With a minimum combined single limit of [Dollar Amount] Dollars ([e.g., $2,000,000.00]) per occurrence and [Dollar Amount] Dollars ([e.g., $4,000,000.00]) in the aggregate, naming Lessor and any parties reasonably designated by Lessor as additional insureds. (b) Property Insurance: Covering Lessee's personal property, trade fixtures, and leasehold improvements within the Premises against loss or damage by fire and extended perils, for the full replacement cost. (c) Workers' Compensation Insurance: As required by applicable law. Lessee shall provide Lessor with certificates of insurance evidencing such coverage prior to the Commencement Date and upon each renewal.

3.10.2 Lessor's Insurance

Lessor shall maintain property insurance covering the building structure of the Project (excluding Lessee's property and improvements) and commercial general liability insurance for the Common Areas. The cost of such insurance attributable to the Premises shall be passed through to Lessee as Additional Rent under Section 3.4.2(b).

3.11 Alterations and Improvements

Lessee shall not make any alterations, additions, or improvements to the Premises without Lessor's prior written consent, which consent may be withheld in Lessor's sole discretion. All approved alterations shall be made at Lessee's sole cost and expense, in a good and workmanlike manner, and in compliance with all applicable laws and building codes. All such alterations, once made, shall become the property of Lessor and remain upon the Premises at the Expiration Date without compensation to Lessee, unless Lessor requires their removal, in which case Lessee shall remove them and restore the Premises to its original condition at its sole cost.

3.12 Assignment and Subletting

Lessee shall not assign this Agreement, in whole or in part, nor sublet the Premises or any portion thereof, nor grant any concession or license within the Premises, without the prior written consent of Lessor, which consent may be withheld in Lessor's sole and absolute discretion. Any attempted assignment or subletting without such consent shall be void and constitute a material default under this Agreement.

3.13 Compliance with Laws

Lessee shall, at its sole cost and expense, promptly comply with all present and future laws, ordinances, orders, rules, regulations, and requirements of all federal, state, and local governments and authorities pertaining to the Premises, its use, and occupancy, including but not limited to, those relating to zoning, building codes, environmental protection, and the Americans with Disabilities Act (ADA).

3.14 Hazardous Materials

Lessee shall not cause or permit the storage, use, generation, release, or disposal of any Hazardous Materials on, under, or about the Premises, except for those quantities typically used in connection with the Permitted Use and in compliance with all Environmental Laws. Lessee shall promptly notify Lessor of any release of Hazardous Materials. Lessee shall indemnify, defend, and hold Lessor harmless from any and all claims, liabilities, damages, and costs arising from Lessee's use or release of Hazardous Materials.

3.15 Indemnification

Lessee shall indemnify, defend, and hold harmless Lessor and its agents, employees, and contractors from and against any and all claims, liabilities, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising from or in connection with Lessee's use or occupancy of the Premises, any breach by Lessee of this Agreement, or any act or omission of Lessee or its agents, employees, or invitees. Lessor shall indemnify, defend, and hold harmless Lessee from and against any claims, liabilities, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising solely from the gross negligence or willful misconduct of Lessor or its agents within the Common Areas.

3.16 Access by Lessor

Lessor and its agents shall have the right, upon reasonable prior written notice (except in emergencies where no notice is required), to enter the Premises at reasonable times to inspect the same, make repairs, perform maintenance, or show the Premises to prospective purchasers, lenders, or tenants. Lessor shall use reasonable efforts to minimize interference with Lessee's business operations.

3.17 Holding Over

If Lessee remains in possession of the Premises after the Expiration Date or earlier termination of this Agreement without a new written agreement from Lessor, such holding over shall constitute a tenancy at sufferance, and Lessee shall pay to Lessor a rent equal to one hundred fifty percent (150%) of the Total Rent applicable immediately prior to the Expiration Date, computed on a daily basis. Such holding over shall not be construed as a renewal or extension of this Agreement.

3.18 Representations and Warranties

3.18.1 Lessor's Representations

Lessor represents and warrants that: (a) it has full power and authority to enter into this Agreement; (b) the Premises are not subject to any unrecorded liens, encumbrances, or restrictions that would materially interfere with Lessee's Permitted Use; and (c) to Lessor's knowledge, the Premises comply with all applicable environmental laws.

3.18.2 Lessee's Representations

Lessee represents and warrants that: (a) it has full power and authority to enter into this Agreement; and (b) the individual executing this Agreement on behalf of Lessee is duly authorized to do so.

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4. Default, Termination, and Remedies

4.1 Events of Default

The occurrence of any of the following shall constitute an "Event of Default" by Lessee: (a) Monetary Default: Failure to pay any installment of Base Rent or Additional Rent when due, if such failure continues for [Number] ([e.g., five (5)]) days after written notice from Lessor. (b) Non-Monetary Default: Failure to perform any other covenant, term, or condition of this Agreement (other than payment of rent), if such failure continues for thirty (30) business days after written notice from Lessor; provided, however, if such non-monetary default is not reasonably capable of cure within thirty (30) business days, Lessee shall not be in default if Lessee commences cure within such period and thereafter diligently and continuously pursues the cure to completion. (c) Insolvency/Bankruptcy: The filing of a petition by or against Lessee seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any present or future bankruptcy, insolvency, or other debtor relief law; or the appointment of a receiver or trustee for all or a substantial portion of Lessee's assets, if such condition is not dismissed or vacated within [Number] ([e.g., sixty (60)]) days. (d) Abandonment: Abandonment of the Premises by Lessee for a period of [Number] ([e.g., thirty (30)]) consecutive days.

4.2 Lessor's Remedies

Upon the occurrence of an Event of Default by Lessee, Lessor may, at its option, pursue any one or more of the following remedies without limiting any other remedies available at law or in equity: (a) Termination: Terminate this Agreement by giving Lessee written notice of termination. Upon such termination, Lessee's right to possession of the Premises shall cease, and Lessee shall immediately quit and surrender the Premises to Lessor. (b) Re-entry and Possession: Re-enter and take possession of the Premises, with or without terminating this Agreement, by self-help or by legal process, without being liable for prosecution or any claim of damages therefor. (c) Acceleration of Rent: Declare immediately due and payable the entire amount of unpaid Total Rent for the remainder of the Lease Term, together with any other sums due hereunder. (d) Re-lease: Re-lease the Premises or any part thereof for such term (which may be for a term greater or less than the remainder of the Lease Term), at such rent, and upon such other terms and conditions as Lessor, in its sole discretion, may deem advisable. Lessee shall be liable for any deficiency between the rent obtained from re-leasing and the Total Rent remaining due under this Agreement, plus all costs incurred by Lessor in re-leasing (including brokerage commissions, tenant improvement costs, and advertising expenses). (e) Damages: Recover from Lessee all damages incurred by Lessor as a result of the default, including but not limited to, unpaid Total Rent, costs of re-taking possession, costs of restoring the Premises, brokerage commissions, attorneys' fees, and any other costs or expenses provided for in this Agreement or by law. (f) Application of Security Deposit: Apply the Security Deposit, or any portion thereof, to cure any default or to compensate Lessor for any damage or loss.

4.3 Lessee's Remedies

Upon a material breach by Lessor of any material covenant or condition of this Agreement, Lessee shall provide written notice to Lessor specifying the breach. If Lessor fails to cure such breach within [Number] ([e.g., thirty (30)]) business days after receiving such notice (or a longer period if the nature of the cure reasonably requires more than thirty (30) business days, provided Lessor commences cure within such period and diligently pursues it to completion), Lessee may pursue any remedies available at law or in equity, including, but not limited to, specific performance, injunctive relief, or damages. Provided, however, Lessee shall have no right to terminate this Agreement or withhold rent unless such right is expressly provided by applicable law or a final, non-appealable court order.

4.4 Waiver of Remedies

No delay or omission by Lessor in exercising any right or remedy upon any default shall impair any such right or remedy or be construed as a waiver of any such default or acquiescence therein. No waiver of any single default shall be deemed a waiver of any subsequent default of the same or any other nature.

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5. Boilerplate Legal Provisions

5.1 Severability

If any provision of this Agreement, or the application thereof to any person or circumstance, is held invalid or unenforceable, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted by law.

5.2 Entire Agreement

This Agreement, including all exhibits and addenda attached hereto, constitutes the entire agreement between Lessor and Lessee with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, negotiations, representations, and understandings, whether written or oral.

5.3 Amendments

No amendment, modification, or waiver of any provision of this Agreement shall be effective unless in writing and signed by both Lessor and Lessee.

5.4 Force Majeure

Neither Lessor nor Lessee shall be deemed in default of its obligations under this Agreement (except for Lessee's obligation to pay Total Rent) if and to the extent that it is prevented or delayed in performing such obligations by a Force Majeure Event. The party affected by a Force Majeure Event shall promptly notify the other party and use commercially reasonable efforts to overcome such event.

5.5 Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of [State where property is located], without regard to its conflict of laws principles.

5.6 Notices

All notices, demands, and other communications required or permitted under this Agreement shall be in writing and shall be deemed duly given: (a) upon personal delivery; (b) one (1) business day after deposit with a nationally recognized overnight courier service (e.g., FedEx, UPS) for next business day delivery; (c) three (3) business days after mailing by certified mail, return receipt requested, postage prepaid; or (d) upon transmission by email (provided that a hard copy is sent via one of the other methods within one business day), to the parties at their respective addresses set forth in Section 1 or such other address as either party may designate by notice to the other.

Lessor's Notice Address: [Lessor's Full Address for Notices] Attn: [Lessor Contact Name/Department] Email: [Lessor's Email for Notices]

Lessee's Notice Address: [Lessee's Full Address for Notices] Attn: [Lessee Contact Name/Department] Email: [Lessee's Email for Notices]

5.7 Waiver

No waiver by either party of any breach of any covenant or provision of this Agreement shall be deemed a waiver of any preceding or succeeding breach of the same or any other covenant or provision.

5.8 Successors and Assigns

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective legal representatives, heirs, successors, and permitted assigns.

5.9 Attorneys' Fees

In the event of any litigation, arbitration, or other legal proceeding arising out of or related to this Agreement, the prevailing party shall be entitled to recover from the non-prevailing party all reasonable attorneys' fees, expert witness fees, and costs incurred in connection with such proceeding.

5.10 Time of Essence

Time is of the essence with respect to the performance of all obligations under this Agreement.

5.11 Dispute Resolution (Choose One Option Below)

OPTION A: ARBITRATION Any dispute, controversy, or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding arbitration administered by the American Arbitration Association ("AAA") in accordance with its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitration shall take place in [City, State]. There shall be [One/Three] arbitrator(s) appointed in accordance with the AAA Rules. The language of the arbitration shall be English.

OPTION B: LITIGATION Any dispute, controversy, or claim arising out of or relating to this Agreement shall be subject to the exclusive jurisdiction of the state and federal courts located in [County, State], and each party hereby irrevocably consents to the personal jurisdiction of such courts and waives any objection to venue in such courts.

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6. Formal Execution Block

IN WITNESS WHEREOF, the parties hereto have executed this Commercial Real Estate Lease Agreement Template as of the Effective Date first written above.

LESSOR:

[Legal Name of Lessor Entity] A [Type of Entity]

By:

Name: [Printed Name of Authorized Signatory] Title: [Title of Authorized Signatory] Date: [Date of Signature]

LESSEE:

[Legal Name of Lessee Entity] A [Type of Entity]

By:

Name: [Printed Name of Authorized Signatory] Title: [Title of Authorized Signatory] Date: [Date of Signature]