Once you have finalized the process of negotiation about investing in commercial property through lease, you should understand the lease process and what should a lease document contain. Setting up leases is not so difficult process as you once consider, the key to do is to understand the lease document and what are the related requirements and then you can put the whole into action. Once you know the procedure, you will understand it that commercial leases are different from residential property leases but are quite easy and straight forward. Here I am going to explain few common sections of commercial lease documents and will briefly explain them.

Parties

Parties are the tenants and the landlords who are involved in the leasing of the property. Make sure the document should contain the official names of the individuals who are involved. If you are leasing the property on your business behalf or renting out your property to a business, then write the name of business in party name, not the person who is managing the business.

Term

This section explains the beginning and ending date of the contract of leasing the property. Landlord should make the leased premises available to the tenant on the beginning of the Lease term and if he can not due to any reason, rent will also be abated according to the time period. The term should be an open document so that if once the period is ended, it can be extended further on both parties’ consent.

Premises

If you are renting out the property or taking it, make sure you have understood the property entirely or have described the property completely to the tenant. It is necessary because may be the whole property will be distinguished into small blocks and few are rented to one tenant and rest to the others. Therefore, it is necessary to brief the complete premises that you are renting out.

Rent

This section explains how the rent is calculated and other costs related with the lease. It is written in the document that a tenant is liable to pay this much amount per year and in form of monthly installments which shall be due in advance on the particular mentioned date during the whole lease term. Tenant will also pay a specific amount to Landlord in form of “Security Deposit”. There are several uncommon terms present in legal documents but these all should be clear to both parties.

Deposit

Deposit is the same amount that is previously called as “Security Deposit”. This section is very important for the landlord as it enables him to receive a handsome amount in form of security for the rental property. At the same time, all the conditions should be explained to the tenant under which security deposit can be forfeited.

This is all for today, rest I will described the rest of the document in any later post.