8 key components to include in a lease agreement

On Behalf of | May 29, 2024 | Commercial Real Estate, Leasing

With more aspiring entrepreneurs looking to launch their businesses, you might notice an increased interest in leasing office space. This trend offers property owners like yourself a chance to earn passive income from your investment. Since you’ll be permitting others to use your property for a specific period, it’s crucial that your lease agreement is comprehensive.

Here are some essential elements that newcomers to commercial real estate should include:

  • Terms of the lease: Start with the basics. Your agreement should specify the type of lease, its duration, renewal options, possibilities for extending the lease and conditions for termination.
  • Property details: Include detailed information about the property, such as its address, square footage, amenities and other significant characteristics.
  • Rent details: Clearly state the rent amount, due dates, responsible parties, and accepted payment methods. Include any specific arrangements, such as a percentage of the business’ profits if agreed upon.
  • Permitted use of property: Define what activities the tenant may conduct on the premises and note any restrictions to ensure compliance with zoning laws.
  • Common area obligations: Outline which common areas the tenant may access, usage limitations and whether there are charges imposed for their use.
  • Rights and responsibilities: Detail what both landlords and tenants are entitled to and responsible for within the leasing agreement.
  • Dispute resolution: Disagreements may happen. Indicate what actions involved parties can take to resolve disputes.
  • Maintenance and repair: Provide specific information on which maintenance and repairs you, as the landlord, will cover and which are the tenants’ responsibility.

An iron-clad lease agreement allows you to set clear guidelines and expectations for your tenants, minimizing the potential for disputes. However, depending on your property, you might require additional and specific clauses.

Do you need an attorney when leasing out property?

Leasing property might seem straightforward, but unexpected issues can arise that new landlords may not anticipate. A seasoned lawyer with experience in property and real estate laws can help spot potential issues and mitigate them. With their legal guidance, you gain an added layer of protection and expertise.

Although drafting a lease on your own is possible, insights from a professional can help minimize potential risks, saving you time and resources in the long run.