Lease Agreement Format for Hotel

MASTER COMMERCIAL HOTEL LEASE AGREEMENT

DOCUMENT CONTROL

• Effective Date: [Date: Month Day, Year]
• Document Reference Number: [Insert Doc Ref / Tracking Number]
• Version: 1.0 (Production / Execution Ready)
• Governing Jurisdiction: State of [State/Province], Country of [Country]

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OFFICIAL NOTICE & LEGAL DISCLAIMER

IMPORTANT NOTICE: THIS AGREEMENT IS A LEGALLY BINDING CONTRACT FOR THE LEASE AND OPERATION OF REAL PROPERTY AND COMMERCIAL HOTEL ASSETS. IT IMPOSES SIGNIFICANT FINANCIAL, OPERATIONAL, AND LEGAL OBLIGATIONS ON BOTH LESSOR AND LESSEE. LAWS GOVERNING COMMERCIAL LEASES, HOTEL OPERATIONS, LIQUOR LICENSING, LABOR LAWS, AND ACCESSIBILITY (E.G., ADA) VARY SIGNIFICANTLY BY JURISDICTION. THE PARTIES MUST CONSULT QUALIFIED COMMERCIAL REAL ESTATE LEGAL COUNSEL AND TAX ADVISORS PRIOR TO EXECUTING THIS AGREEMENT.

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PARTIES AND RECITALS

This MASTER COMMERCIAL HOTEL LEASE AGREEMENT (the "Lease" or "Agreement") is entered into as of the Effective Date set forth above, by and between:

LESSOR: [Full Legal Name of Lessor Entity], a [Type of Entity, e.g., Delaware Limited Liability Company], having its principal place of business at [Lessor Principal Address] ("Lessor"),
AND
LESSEE: [Full Legal Name of Lessee Entity], a [Type of Entity, e.g., Delaware Limited Liability Company], having its principal place of business at [Lessee Principal Address] ("Lessee").

Lessor and Lessee may individually be referred to as a "Party" and collectively as the "Parties."

RECITALS

A. Lessor is the fee simple owner of certain real property, improvements, and personal property comprising the hotel facility commonly known as [Hotel Name / Brand], located at [Street Address, City, State, Zip Code] (the "Property").
B. Lessee desires to lease the Property and associated operational assets from Lessor to operate a full-service/select-service hotel, and Lessor desires to lease the same to Lessee under the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants, terms, and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

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ARTICLE I: DEFINITIONS

1.1 "Base Rent" means the fixed monthly rental amount payable by Lessee to Lessor pursuant to Section 3.1.
1.2 "Building" means the structural improvements, guest rooms, common areas, administrative offices, banquet/meeting spaces, restaurants, bars, parking facilities, and mechanical systems situated on the Land.
1.3 "FF&E" means all Furniture, Fixtures, and Equipment located on or used in connection with the operation of the Hotel, including guest room furniture, televisions, soft goods, kitchen/restaurant equipment, linen, chinaware, laundry equipment, front desk computer systems, and administrative equipment.
1.4 "Gross Revenue" means all revenues, income, proceeds, and receipts of every kind derived directly or indirectly from the operation of the Hotel and Premises, including room rentals, food and beverage sales, meeting room rentals, parking fees, administrative fees, telephone/data charges, and retail sales, calculated on an accrual basis in accordance with GAAP and the Uniform System of Accounts for the Lodging Industry (USALI), excluding only sales taxes, occupancy taxes, and direct customer refunds.
1.5 "Hotel" means the lodging facility operating on the Premises, currently known as [Hotel Name], containing [Number of Guest Rooms] guest rooms.
1.6 "Land" means the real property legally described in Exhibit A attached hereto.
1.7 "Operating Term" means the Initial Term plus any properly exercised Extension Terms pursuant to Article II.
1.8 "Percentage Rent" means the contingent rent calculated as a percentage of Gross Revenue pursuant to Section 3.2.
1.9 "Premises" collectively means the Land, the Building, the FF&E, and all appurtenant easements, rights, and privileges associated therewith.

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ARTICLE II: DEMISE, TERM, AND RENEWAL OPTIONS

2.1 Lease of Premises

Lessor hereby leases, demises, and lets to Lessee, and Lessee hereby leases and hires from Lessor, the Premises, subject to all existing easements, encumbrances, and rights of way of record, for the sole purpose of operating the Hotel and ancillary commercial services permitted under Article V.

2.2 Initial Term

The initial term of this Lease (the "Initial Term") shall commence on [Commencement Date] (the "Commencement Date") and shall expire at 11:59 PM local time on [Expiration Date] (the "Expiration Date"), unless earlier terminated or extended pursuant to the provisions of this Lease.

2.3 Renewal Options

Provided Lessee is not in Default under this Lease at the time of exercise or at the commencement of the applicable Extension Term, Lessee shall have [Number of Options, e.g., 2] options to extend the term of this Lease for an additional [Number of Years, e.g., 5] years each (each an "Extension Term").

• Notice Requirement: Lessee must provide written notice of its election to extend no later than [Number of Days, e.g., 180] days prior to the expiration of the Initial Term or the then-current Extension Term.
• Terms During Extension: All terms, covenants, and conditions of this Lease shall apply during any Extension Term, save and except that Base Rent shall be adjusted as set forth in Section 3.1.

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ARTICLE III: RENT, FINANCIAL COVENANTS, AND AUDIT RIGHTS

3.1 Base Rent

Lessee shall pay to Lessor fixed annual base rent ("Base Rent") in the amount of $[Annual Base Rent Amount] per annum, payable in equal monthly installments of $[Monthly Base Rent Amount] on or before the first (1st) day of each calendar month during the Term.

• Rent Escalation: On each anniversary of the Commencement Date, the Base Rent shall automatically increase by [Percentage Increase, e.g., 3.0%] over the Base Rent of the immediately preceding lease year.

3.2 Percentage Rent

In addition to Base Rent, Lessee shall pay to Lessor an annual percentage rent ("Percentage Rent") equal to [Percentage, e.g., 5.0%] of the amount by which Gross Revenue in any fiscal year exceeds the threshold of $[Gross Revenue Threshold].

• Payment Terms: Percentage Rent shall be calculated and paid quarterly within thirty (30) days following the end of each calendar quarter, with a final reconciliation delivered within sixty (60) days following the close of each fiscal year.

3.3 Security Deposit

Upon execution of this Lease, Lessee shall deposit with Lessor the sum of $[Security Deposit Amount] (the "Security Deposit"). The Security Deposit shall be held by Lessor as security for the faithful performance by Lessee of all terms, covenants, and conditions of this Lease. The Security Deposit shall be non-interest bearing unless required by applicable law.

3.4 Audit Rights and Financial Reporting

(a) Monthly Reports: Within fifteen (15) days after the end of each calendar month, Lessee shall furnish Lessor with a detailed statement of Gross Revenue and occupancy metrics (ADR, RevPAR, Occupancy Rate) for the preceding month.
(b) Annual Audit: Within ninety (90) days following the end of each fiscal year, Lessee shall provide Lessor with financial statements of the Hotel operations audited by an independent certified public accountant (CPA).
(c) Lessor Audit Rights: Lessor or its authorized representatives shall have the right, upon five (5) business days' prior written notice, to audit, inspect, and copy all books, records, ledgers, tax returns, and operational files of Lessee related to the Hotel. If an audit reveals an underpayment of Rent exceeding [Audit Error Percentage, e.g., 3%] for any audited period, Lessee shall pay the full cost of the audit plus the underpaid amount within ten (10) business days.

3.5 Late Charges and Interest

Any Rent or other monetary sums payable by Lessee under this Lease not paid within five (5) days of its due date shall incur a late fee equal to [Late Fee Percentage, e.g., 5%] of the overdue amount. Additionally, unpaid amounts shall bear interest at the rate of [Interest Rate, e.g., 12%] per annum, or the maximum legal rate allowed by law, whichever is lower, from the due date until paid in full.

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ARTICLE IV: TRIPLE-NET (NNN) OBLIGATIONS: TAXES, INSURANCE, & UTILITIES

This Lease is a "Triple-Net Lease" (NNN). Lessor shall receive all Base Rent and Percentage Rent net and clear of any taxes, assessments, operating costs, maintenance charges, insurance premiums, or utility costs associated with the Premises.

4.1 Real Estate and Personal Property Taxes

Lessee shall pay directly to the taxing authorities all real property taxes, special assessments, personal property taxes, transit taxes, and related governmental charges levied or assessed against the Premises or FF&E during the Term. Lessee shall deliver proof of payment to Lessor at least ten (10) days prior to the delinquency date of each tax tax period.

4.2 Utilities and Services

Lessee shall be solely responsible for contracting and paying directly for all utility services provided to the Premises, including electricity, natural gas, water, sewer, trash removal, internet, cable/satellite television, telecommunications, and security services. Lessor shall have no liability for interruptions or failures of utility services.

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ARTICLE V: HOTEL OPERATIONS, MAINTENANCE, AND FF&E RESERVE

5.1 Permitted Use and Operational Standard

Lessee shall use and operate the Premises continuously and exclusively as a full-service/select-service hotel under the brand name [Approved Brand/Flag] (or such other brand approved in writing by Lessor) and for associated ancillary uses such as dining, bar facilities, conferencing, and events ("Permitted Use"). Lessee shall operate the Hotel in a first-class manner comparable to competing hotels in the [Geographic Market/Submarket] market area.

5.2 Maintenance and Repair Responsibilities

(a) Lessee Responsibilities: Lessee shall, at its sole cost and expense, keep, maintain, repair, and replace the Premises in good order, condition, and repair, including all interior/exterior non-structural elements, mechanical, electrical, plumbing, HVAC systems, elevators, roofing membranes, doors, windows, and parking lots.
(b) Lessor Responsibilities: Lessor shall only be responsible for structural foundations, load-bearing exterior walls, and structural steel components of the Building, provided that any damage thereto caused by the negligence or willful misconduct of Lessee, its agents, or invitees shall be repaired by Lessee at Lessee's sole cost.

5.3 FF&E Reserve Account

Lessee shall establish and maintain a dedicated, restricted bank account (the "FF&E Reserve Account") to fund periodic replacements, renewals, and additions to FF&E and soft goods.

• Contribution Amount: On or before the fifteenth (15th) day of each month, Lessee shall deposit into the FF&E Reserve Account an amount equal to [FF&E Percentage, e.g., 4.0%] of the Gross Revenue generated during the preceding calendar month.
• Use of Funds: Funds in the FF&E Reserve Account shall be used solely for capital expenditures, repairs, and updates to FF&E required to maintain the Hotel standard, subject to Lessor's prior written approval of annual capital budgets exceeding [Cap Ex Threshold Amount, e.g., $25,000].

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ARTICLE VI: LICENSES, PERMITS, AND REGULATORY COMPLIANCE

6.1 Regulatory Compliance

Lessee shall, at its sole cost, promptly comply with all federal, state, and local laws, codes, ordinances, regulations, and orders, including health and safety codes, municipal zoning, employment laws, and the Americans with Disabilities Act (ADA).

6.2 Operating Licenses and Liquor Licenses

Lessee shall obtain and maintain, at its sole expense, all permits, business licenses, hotel operational certificates, health department permits, and liquor licenses required to operate the Hotel and its food and beverage outlets.

• Liquor License Covenant: Lessee shall hold all alcoholic beverage licenses in strict compliance with applicable liquor control board regulations. Upon termination or expiration of this Lease, Lessee shall transfer, assign, or facilitate the reissue of all operating licenses and liquor licenses to Lessor or Lessor’s designated successor operator, to the extent permitted by law.

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ARTICLE VII: ASSIGNMENT, SUBLETTING, AND MANAGEMENT AGREEMENTS

7.1 Prohibition on Unapproved Transfers

Lessee shall not sell, assign, mortgage, pledge, encumber, or transfer this Lease, nor sublet the whole or any part of the Premises, without obtaining the prior written consent of Lessor, which consent may be withheld in Lessor's sole and absolute discretion.

7.2 Permitted Management Companies

Lessee shall not enter into any hotel management agreement ("Management Agreement") with any third-party management entity to operate the Hotel without Lessor's prior written approval of both the management entity and the terms of the Management Agreement. Any management company must execute a subordination and non-disturbance agreement (SNDA) acknowledging Lessor's rights under this Lease.

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ARTICLE VIII: INSURANCE AND INDEMNIFICATION

8.1 Required Insurance Coverage

Lessee shall maintain, at its sole expense, the following insurance policies during the Term:

1. Commercial General Liability (CGL): Limits of not less than $[CGL Policy Limit, e.g., $5,000,000] per occurrence / aggregate, including coverage for personal injury, broad-form property damage, product liability, and liquor liability ("Liquor Law Liability").
2. Property and Fire Insurance: "All-Risk" / Special Form property insurance covering 100% of the full replacement cost of the Building, FF&E, and personal property.
3. Business Interruption Insurance: Coverage insuring against loss of income for a period of not less than [Number of Months, e.g., 12] months.
4. Workers' Compensation: Statutory limits compliant with applicable state laws, plus Employer's Liability limits of $[Limit Amount, e.g., $1,000,000].

8.2 Policy Requirements

All insurance policies shall: (i) name Lessor (and Lessor's mortgagees) as an Additional Insured/Loss Payee; (ii) be primary and non-contributing; and (iii) contain an endorsement requiring thirty (30) days' prior written notice to Lessor prior to cancellation or material modification.

8.3 Indemnification

Lessee agrees to defend, indemnify, and hold harmless Lessor, its officers, directors, shareholders, members, employees, and agents from and against any and all claims, demands, liabilities, suits, losses, costs, damages, and expenses (including reasonable attorneys' fees) arising out of or resulting from: (a) any breach or default by Lessee under this Lease; (b) the operation, management, or use of the Premises by Lessee, its contractors, guests, or invitees; and (c) any personal injury, death, or property damage occurring on or about the Premises during the Term.

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ARTICLE IX: CASUALTY AND CONDEMNATION

9.1 Casualty Damage

If the Hotel is damaged by fire or other insured casualty, Lessee shall promptly notify Lessor.

• Partial Damage: If the damage is partial and can be repaired within [Number of Days, e.g., 180] days under applicable building codes, Lessee (using insurance proceeds) shall restore the Premises to substantially the same condition as prior to the casualty, and Rent shall abate proportionally based on unusable rooms/spaces.
• Total Destruction: If the Premises are substantially destroyed (exceeding [Percentage, e.g., 50%] of replacement value) during the final two (2) years of the Term, either Party may terminate this Lease upon thirty (30) days' written notice to the other.

9.2 Eminent Domain / Condemnation

If the entire Premises, or a substantial portion rendering the remainder economically unviable for hotel operations, is taken by eminent domain or condemnation by any governmental authority, this Lease shall terminate as of the date of taking. All compensation awarded for the taking of real estate and structures shall belong exclusively to Lessor, while Lessee may file a separate claim for moving expenses and trade fixtures owned by Lessee.

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ARTICLE X: DEFAULTS AND REMEDIES

10.1 Events of Default

The occurrence of any one or more of the following shall constitute an "Event of Default" by Lessee:

1. Failure to pay any installment of Base Rent, Percentage Rent, taxes, insurance, or monetary sum when due, and such failure continues for five (5) business days after written notice from Lessor.
2. Failure to comply with any non-monetary covenant, condition, or rule set forth in this Lease, and such failure continues for thirty (30) days after written notice from Lessor (or such longer period if cure cannot reasonably be effected within 30 days and Lessee diligently pursues such cure).
3. The insolvency, bankruptcy, assignment for the benefit of creditors, or appointment of a receiver for Lessee or Lessee's assets.
4. Suspension, revocation, or loss of any mandatory operating license, health permit, or liquor license required for Hotel operations.

10.2 Lessor Remedies

Upon the occurrence of an Event of Default, Lessor shall have the immediate right, at its option, to pursue any one or more of the following remedies without further notice or demand:

1. Terminate this Lease and Lessee's right of possession, and re-enter and repossess the Premises by lawful proceedings.
2. Re-let the Premises or any part thereof for the account of Lessee, holding Lessee liable for all deficiency in Rent and re-letting expenses.
3. Accelerate and declare immediately due and payable the present value of all Rent reserved hereunder for the remainder of the Term.
4. Pursue any other legal or equitable remedies available under state law, including injunctions and recovery of reasonable attorneys' fees.

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ARTICLE XI: SURRENDER AND HANDOVER PROTOCOL

Upon the expiration or earlier termination of this Lease, Lessee shall surrender the Premises, including all Building systems, guest rooms, and FF&E, to Lessor in good order, condition, and repair, ordinary wear and tear excepted. Lessee shall execute all necessary transfer documents to effectuate an immediate, seamless operational handover of the Hotel, including guest reservation databases, advance room deposits, vendor contracts (assigned at Lessor's option), and operational permits.

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ARTICLE XII: MISCELLANEOUS PROVISIONS

12.1 Governing Law and Venue

This Lease shall be governed by, construed, and enforced in accordance with the laws of the State of [State/Province], without regard to principles of conflicts of law. Venue for any dispute shall lie exclusively in the courts of [County, State].

12.2 Notices

All formal notices required or permitted under this Lease shall be in writing and sent via certified mail (return receipt requested), nationally recognized overnight courier (e.g., FedEx), or personal delivery, addressed as follows:

If to Lessor:
[Lessor Legal Entity Name]
Attn: [Contact Person/Title]
[Mailing Address]
Email: [Email Address]

If to Lessee:
[Lessee Legal Entity Name]
Attn: [Contact Person/Title]
[Mailing Address]
Email: [Email Address]

12.3 Severability

If any provision of this Lease is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable, such provision shall be severed, and the remaining provisions shall continue in full force and effect.

12.4 Entire Agreement; Amendments

This Lease, including all Exhibits, constitutes the entire agreement between the Parties regarding the subject matter hereof and supersedes all prior negotiations, representations, or agreements. This Lease may only be amended by a written instrument signed by authorized officers of both Parties.

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SIGNATURES AND ACKNOWLEDGMENT BLOCK

IN WITNESS WHEREOF, the Parties hereto have caused this Master Commercial Hotel Lease Agreement to be executed by their duly authorized corporate officers as of the Effective Date.

LESSOR:

[LESSOR LEGAL ENTITY NAME]

By: _____________________________________
Name: [Authorized Signatory Name]
Title: [Authorized Title, e.g., Managing Member / President]
Date: ___________________________________

Witness 1: ________________________ Name: ________________________
Witness 2: ________________________ Name: ________________________

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LESSEE:

[LESSEE LEGAL ENTITY NAME]

By: _____________________________________
Name: [Authorized Signatory Name]
Title: [Authorized Title, e.g., Chief Executive Officer]
Date: ___________________________________

Witness 1: ________________________ Name: ________________________
Witness 2: ________________________ Name: ________________________

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NOTARY PUBLIC ACKNOWLEDGMENTS

State of [State], County of [County] ss.

On this _____ day of _________, 20, before me, the undersigned Notary Public, personally appeared [Name of Lessor Signatory], who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged that they executed the same in their authorized capacity on behalf of [Lessor Legal Entity Name].

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Notary Public, State of [State]
My Commission Expires: _______________
(SEAL)

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State of [State], County of [County] ss.

On this _____ day of _________, 20, before me, the undersigned Notary Public, personally appeared [Name of Lessee Signatory], who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged that they executed the same in their authorized capacity on behalf of [Lessee Legal Entity Name].

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Notary Public, State of [State]
My Commission Expires: _______________
(SEAL)

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STEP-BY-STEP EXECUTION AND ENFORCEMENT GUIDE

To ensure this Commercial Hotel Lease Agreement is executed correctly, legally enforceable, and operationally effective, follow these critical execution steps:

1. Schedule Attachments and Legal Description Verification:

   • Prepare Exhibit A containing the full legal property description (metes and bounds or recorded lot/block plot) matching the official county land records.
   • Conduct an complete inventory of all FF&E assets included in the demise and attach it as Exhibit B (FF&E Inventory).

2. Regulatory & License Transition Planning:

   • Review local municipal rules regarding liquor license transferability, health department permits, and local hotel occupancy tax registrations. Ensure application processes for Lessee's operating permits are submitted at least 60–90 days prior to the Commencement Date.

3. Formal Execution, Notarization, and Recording:

   • Ensure both Lessor and Lessee execute the agreement in the presence of two witnesses and a certified Notary Public.
   • Execute a formal Memorandum of Lease summarizing key lease terms (Lessor, Lessee, Premises, Term, Renewal Options) and record the Memorandum in the public land records of the county where the Property is located to protect Lessee's leasehold estate against third-party claims.

4. Financial and Insurance Setup:

   • Open the designated FF&E Reserve Account with a qualified financial institution and set up recurring monthly wire mechanisms.
   • Provide certificates of insurance (COIs) to Lessor showing all required policy limits, with Lessor listed as Additional Insured/Loss Payee, prior to taking physical possession of the Premises.