Commercial leases are leases signed between business and the owner of a property which the business is interested in leasing. Such contracts often outline the terms and conditions under which the owner agrees to let the business occupy the property to carry out activities that are in connection with the functioning of the business. A long term commercial lease is one that is signed for a period of a year or more.
How To Prepare A Commercial Lease Agreement?
As opposed to residential leases, the format of commercial leases are non-uniform and no standard format is ever followed. As the requirements vary from business to business it is difficult to stick to one particular format.
Before the contract is drawn up, the owner and the business representative must discuss the requirements at length and lay down the terms and conditions so that future disputes are avoided. Most commercial leases allow modifications to be made in the structure of the building, and this too must be included in the contract.
Commercial leases signed for long periods of time often involve up front payment of a lump sum. This amount and any other payments made must be clearly spelled out in the contract.
What Should Be Included In A Long Term Commercial Lease?
As commercial leases involve larger amounts of money and more number of clauses, it needs more attention while drafting. Each clause must be clearly mentioned along with the consequences of breaching it. Following are some of the important clauses that should be included in a long term commercial lease-
Term of the lease & conditions for renewal
Rent, security deposit and charges of maintenance
Permitted modifications that can be made to the structure of the property
Tenant’s right to sublet
Consequences of breaching the contract
Notice period in case either party wishes to terminate the contract
How To Make It Legally Enforceable And Valid?
To make a long term commercial lease as legally valid, following are the requirements –
The contract must be carefully prepared with no loopholes that leave room for disputes in future.
The prepared contract must then be printed on stamp paper of recommended value.
Both parties, the owner and the representative of the business must place their signatures on designated places.
The signatures of two witnesses are also required.
The deed must then be notarized at a Sub-Registrar Office and the required stamp duty must be paid.
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