Essential Commercial Lease Terms
Top 10 Essential Commercial Lease Agreement Terms in Oklahoma
Commercial real estate (CRE) can be big business. Commercial lease agreements often contain a wide variety of terms which are highly dependent upon key factors such as the type of space being rented, the needs of the tenant, the requirements of the landlord, the type of business to be conducted in the unit, and more.
It is essential for both landlords and tenants to carefully consider each term that is included (or excluded) in the written commercial lease agreement.
How Oklahoma Courts View and Interpret Commercial Agreements:
Disputes involving commercial agreements in Oklahoma can result in highly variable outcomes depending on the facts and circumstances of each case. Also, while residential lease agreements tend to be standardized across the state, commercial leases are usually extremely different from one property to another, and even one tenant to another within the same property.
Oklahoma judges and courts take a case-by-case approach in resolving disputes, and often take ample time to prioritize the written terms of the commercial agreement as being the true intent of the parties. This means that parties should be extremely careful to draft, review, negotiate, and agree to lease terms which makes full compliance actually possible.
In addition, courts may consider industry standards, trade customs, statutes, regulations, and past cases which are directly applicable or similar to the current dispute.
Different Types of Commercial Leases:
Most commercial leases tend to push various obligations onto the tenant; absolute net leases, triple net leases, and modified gross leases are good examples where the tenant is expected to pick up more responsibilities such as paying property taxes or managing building maintenance. During and after the height of COVID, commercial leases where the landlord retains more responsibility in exchange for a higher all-inclusive weekly or monthly fee to the tenant have become much more common – such as shared coworking and shared workspaces; full service leases and gross leases are good examples here.
10 Terms That Are Essential in Oklahoma Commercial Leases:
No matter what type of lease it is, a well-written commercial lease agreement should use easy-to-understand language, clearly outline the rights and responsibilities of each party, and include terms such as the following:
- Rent Amount and Payment: The lease should clearly state the rent amount and any increases that may occur during the lease term as well as when the increases will start. It should also outline the payment details like monthly or quarterly due date, payment methods, and any penalties for late payment.
- Lease Term: The lease should specify the start and end dates of the lease duration, known as a lease term. It should also outline any renewal options and the notice required to properly terminate the lease from both the landlord and tenant.
- Use of the Property: The lease should describe the permitted uses of the property, including any restrictions or limitations on how the property may be used. This term is particularly important if the property is being used for a specific purpose, such as a restaurant, medical facility, marijuana facility, etc.
- Maintenance and Repairs: The lease should outline the responsibilities of each party for maintaining and repairing the property. Landlords commonly retain responsibility for maintaining the structure and common areas, while tenants are often responsible for maintaining their leased space/unit. Carefully consider which party should repair or replace HVAC, roof, and other critical components.
- Alterations and Improvements: If the tenant plans to make any alterations or improvements to the property, such as building out a new office space or installing new fixtures, the lease should be abundantly clear as to who is responsible for the costs and who keeps the improvements at the conclusion of the lease term.
- Security Deposit: The lease should specify the amount of the security deposit, how and where it will be held, and the conditions for its return. It should also outline any deductions that may be made from the security deposit, such as unpaid rent or damage to the property.
- Insurance Requirements: The lease should specify the insurance requirements for both the landlord and the tenant. This may include general liability insurance, property insurance, and/or worker’s compensation insurance.
- Assignment and Subletting: The lease should describe the requirements or ability for assigning or subletting the leased space. Landlords typically do not allow assignment or subletting without their written consent.
- Default and Remedies: The lease should outline the consequences of a default by either party and the remedies available to the non-defaulting party. This may include the right to terminate the lease, recover damages, or seek injunctive relief.
- Termination, Renewal, Move-Out: Finally, the lease should specify the date, timing, delivery method, and contents of any notices required to terminate or renew and extend the lease as well as the intentionally described terms of the tenant’s removal of all items at the conclusion of the lease term.
Lease Terms for Your Specific Building or Business:
There are several other provisions that should be added to a commercial lease agreement depending on the specific needs of the parties involved. A lease for a retail space may include provisions related to signage or exclusivity clauses that prevent the landlord from leasing space to competitors, while a lease for an office space may include provisions related to parking or access to common areas.
How an Oklahoma Real Estate Attorney Can Help:
The real estate attorneys of Avenue Legal Group are knowledgeable, experienced, and skilled at working with commercial parties to draft, review, negotiate, and execute commercial lease agreements across Oklahoma. If you’re renting a commercial property as either landlord or tenant, reach out to our firm as early as you can in the leasing process to protect your interests and avoid costly mistakes. If you’ve already rented a commercial property and need assistance in resolving a dispute, contact our firm to discuss your case and legal rights.
Contact Avenue Legal Group by phone, text message, or email to discuss how we can help with your commercial lease.
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