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What are some common lease terms in commercial contracts?

Whether you're leasing commercial property to businesses or signing an agreement on new property so your company can take root in the neighborhood, it's important to understand some basic elements of your contract. Commercial leases can get incredibly complex, so you might want to have a business and commercial law professional help you with negotiations, but it's still critical to know what common terms you might see.

Rent clauses are fairly obvious components in any lease contract. You might want to ensure that the rent clause covers all the details. Obviously, you'll want to ensure the monthly, quarterly or annual payment amount is listed so the other party can't claim a different amount should have been paid in the future. You'll also want to ensure the schedule for payments is listed and any grace period and penalties are spelled out.

Another common clause in commercial lease contracts is the premises clause. This is where it's spelled out exactly what the entity leasing has a right to do in the space and what part of the space they can use. In some cases, you might lease rights to the entire building. In other cases, you might only be paying for use of a small corner or even a wall. This would occur in a shared office or retail space.

Other clauses might spell out what type of business can take place in the building, how signs can be displayed and where they can be placed and whether the tenant can sublet the premises in the future. These clauses all protect the rights of both parties, so it's important to ensure your interests are considered as you review, negotiate and sign any lease.

Source: FindLaw, "Important Commercial Lease Terms," accessed Dec. 23, 2016

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