Commercial Office Space Lease Agreement

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An office lease agreement is a legal document between a landlord and tenant that will be occupying space for non-retail use. The space is generally suited for occupations such as accountants, attorneys, real estate agents, or other related fields where clients are welcome for professional consultation. Rent is usually figured on a price per square foot ($/SF) basis with the obligations of the parties to be negotiated between the landlord and tenant.

Commercial Rental Application – Use to verify the tenant’s credit and background.

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How to Rent Office Space

Whether you are the landlord or tenant, renting office space does not usually happen overnight. Determining the amount of space the tenant will need plus negotiating the terms of the lease can last several weeks before the parties can come to an agreement. Therefore, it’s best to have patience throughout the process.

Step 1 – Finding a Tenant / Looking for Space

Whether you are the landlord attempting to find a suitable tenant or a tenant searching for the perfect space it’s best to use the internet to view available properties. The most popular websites, depending on the type of office space, are the following:

Advertising Office Space

These sites are for traditional landlord-tenant relationships where the tenant signs a lease with a start and end date. The responsibilities of each party are also identified along with responsibilities related to taxes, insurance, and common area maintenance (CAM’s).

Office Sub-Leasing (Co-Working) Companies

If the tenant is solely looking for a month-to-month arrangement or a setup where the facilities and utilities will be fully taken care of by the landlord, then office sub-leasing company may be a viable option. The tenant may pay more under this arrangement but will have the peace of mind that they will never have to worry about the utilities on the premises. In addition, these leases are often month to month meaning the tenant can cancel at any time with just thirty (30) days’ notice. Although, a tenant will often get a better deal on the monthly rate if they commit to 6 months or a full year lease.

Step 2 – Tenant Schedules a Showing

Once the tenant has found a few properties in their area that meets their needs, it’s in their best interest to schedule an appointment with the landlord or property manager to visit the property. At the showing, the landlord, or their agent, will give all necessary details about the property including move-in dates, monthly rent, how much space is available, and any other details of the property.

Step 3 – Negotiate the Terms of the Lease

Upon the tenant deciding which space works best for them, the negotiations will begin between the landlord and tenant. A common strategy is for the tenant to narrow it down to two (2) properties and play the landlords against one another. This will allow the tenant to get the best possible rate. Of course, this strategy only works when there are vacancies in the area.

If there are little to no vacancies in the area, the tenant will be subject to paying the market rate including any premium if the space they are seeking requires special accommodation.

Four (4) Types of Office Leases

  1. Co-Working Lease Agreement
    • Landlord: Covers all expenses and utilities.
    • Tenant: No responsibilities.
  2. Gross Lease
    • Landlord: Covers real estate taxes, property insurance, and common area maintenance (CAM’s).
    • Tenant: Covers their utilities and services.
  3. Modified Gross Lease
    • Landlord: Shared costs (negotiated)
    • Tenant: Shared costs (negotiated)
  4. Triple Net (NNN) Lease
    • Landlord: Ensures the roof and parking lot are in good standing.
    • Tenant: Covers real estate taxes, property insurance, and common area maintenance (CAM’s) and their utilities and services.

Step 4 – Landlord Verifies the Tenant

Once a verbal agreement is made between the parties, the landlord will most likely want to verify the tenant is who they claim to be with a Rental Application. This will involve the landlord obtaining the tenant’s financial statements, Secretary of State records, and any other necessary documents. If the tenant is an individual, a standard credit and background check may be required along with 2-3 years of past individual income returns with the Internal Revenue Service (IRS).

Step 5 – Signing the Office Lease

There are three (3) ways to sign:

  1. Handwritten Signature (in-person) – The traditional way of printing out the document and authorizing with all parties present.
  2. Notary Acknowledgment (recommended) – For large-scale lease agreements, it should be authorized in the presence of a notary public. This is done by attaching a notary acknowledgment to the lease and ensures that each individual has authorized the agreement with the notary verifying each person’s identification.
  3. eSignature – Also known as a digital signature, obtains an electronic record of the person’s device to ensure that he or she is signing the document.
    1. DocuSign – #1 eSignature solution in the USA.
    2. HelloSign – In addition, allows the user to create

After the lease is signed the tenant will be obligated to pay the security deposit (if any) and the first (1st) month’s rent.

Step 6 – Taking Occupancy

If the property needs to be built-to-suit to the tenant’s needs then the occupancy date will have to wait until the construction is complete. If the property is ready immediately the landlord will be required to hand over all access to the premises, including, but not limited to, common areas, mailboxes, parking areas, and any other areas permitted under the lease agreement.

If the tenant is responsible for any services on the property such as internet, cable, water/sewer, electricity, or any other utilities. The tenant will be required to place them in their name.

Sample Office Lease Agreement

Download: Adobe PDF, MS Office (.docx), OpenDocument (.odt)

How to Write an Office Lease Agreement

Download in Adobe PDF, Microsoft Word (.docx) or Open Document Text (.odt).

1 – Access The Office Lease Template On This Page

This page will supply a few options for this paperwork. You may download this template as a Word, PDF, or ODT file. If you do not have a program capable of opening or editing any of these file versions, most up-to-date browsers will open a PDF for viewing and printing. If you are filling this document out manually, as opposed to on-screen, it is strongly recommended to do so using blue or black ink. Click on the button labeled with the file extension you wish to download attached to the preview image above.

2 – Introduce This Agreement Through The First Paragraph

The first paragraph of this lease will act to give a brief summary of what this paperwork will define. Begin by entering the Calendar Date you wish to use for the current agreement across the first three blank lines as Calendar Day, Calendar Month, and Calendar Year. Now we will need to name the Lessor. That is, the individual who has the authority to rent the office space to another entity. Record the name of the Lessor on the blank space preceding the bracketed term “Name Of Lessor.” Follow this with his or her Address on the space labeled “Street Address.” Finally, record the Lessor’s State after the term “State Of.” We will also need to record the identity and address of the Lessee. Use the blank space labeled “Name Of Lessee” to record the full name of the entity that will pay the monthly rent to occupy the office space as per the terms listed below. The last two blank spaces require the “Street Address” and State in the Lessee’s address. 

3 – Detail The Basic Lease Information For This Premises

The first several sections will seek to present some specifics regarding the premises being rented and some basic terms this lease will need to be upheld. Locate the first article, labeled “1. Description Of Leased Premises,” then fill how the square footage of the office space being leased on the first blank line. The next blank line of this article, attached to the bracketed label “Type Of Space,” will need to have a brief description of the area being rented. For instance, is it part of office space, storefront, factory space, etc. This information should be followed with the full address where the office space being leased is physically located (building number, street name, unit number, city/neighborhood/zip code) and the State where it is physically located on the last two blank spaces. In some cases, there may be more involved to properly describe a premises. If this is such a case a blank line labeled “Additional Description,” has been included with this section so that you may include such a description. The second article of this agreement, “2. Use Of Leased Premises, “will contain a couple of blank lines which should be used to define precisely what actions/transactions will be allowed in the leased space. This should be a complete list of everything the Lessee will be allowed to do in the leased area while engaged in this agreement. The next item requiring information is titled “Term Of Lease.” Use the first two blank lines in this area to report how many years and months this agreement will be in effect once it is executed. Use the first blank line for the number of years and the second for the number of months. For instance, if this lease is for one year, then place the number “1” on the first blank space and “0” on the second. Next, report the Calendar Day, Month, and Year when this agreement first becomes active using the first three blank lines after the words “…Commencing On The.”  Now we will define the day when this agreement shall expire. Begin by locating the term “…Expiring At Midnight On The” then enter the Calendar Day, Calendar Month, and the Calendar Year of this agreement’s termination date.   In the fourth article, we will have to put the monthly rent amount in writing. Write out the full dollar amount the Lessee must pay in rent by the first of each month on the blank line after the words “…Shall Be.” Make sure to also enter the monthly rent amount as a number after the “$” sign on the blank space in the parenthesis. The last blank space in this paragraph requires the Calendar Day of each month the rent will be considered due. Enter the numerical day of the month the Lessor must receive the monthly rent for the premises from the Lessee on this line.  Many leases will discuss and define the issue of a Lessee’s ability to renew the terms of a rental property. In the fifth section, “Option To Renew,” we will have the opportunity to set the Lessor’s standing on this topic in writing. Begin by marking one of the first two checkbox statements in this area. If the Lessee will not have the option to renew the terms of this lease for an additional amount of time then, mark the first checkbox.

However, if the Lessee will be allowed to renew these terms then mark the second checkbox. This statement will need the number of times the Lessee may enact a renewal of these terms reported on the first blank space of this choice. The last two blank spaces have been reserved to define the number of years and months each renewal will remain in effect.

To fully round out this section, we should give any additional terms that would apply if the Lessee can renew. For this task, we will focus our attention on the checkbox statements below the statement “Rent For Each Option Period…” Only one of these statements should be selected. If the rent will not increase, then mark the first checkbox.  If rent will increase by “…Multiplying The Base Rent By The Annual Change In The Consumer Price Index (CPI)…” then mark the second choice.  If the rent will increase by a predetermined percentage mark the third choice and enter the percentage of increase on the blank line before the “%” symbol. Finally, if the rent will increase by a flat dollar amount, then mark the third choice and report this dollar amount (written out and numerically) on the spaces provided.

 

4 – Produce Some Required Financial Definitions

The next article, “6. Expenses,” will need some attention so that we may define additional costs the Lessee may be responsible for in addition to additional obligations of the Lessor. Three checkbox options shall be provided to define whether this is a “Gross, Modified Gross, Or Triple Net (NNN)” lease. You may only mark one of these three checkboxes depending on the agreed upon terms between Lessor and Lessee. An additional measure to verify each party’s intent will require that both initial the description being chosen.

If this lease can be described as a Gross Lease, then mark the checkbox next to the word “Gross.” The Lessee should initial the “Tenant’s Initials” line and the Lessor must initial the “Landlord’s Initials” line. Choose this option only if the rent amount reported in the fourth article is the only dollar amount the Lessee must pay to remain in compliance with this agreement’s terms. The agreement between these two parties may require that one or both pay for certain expenses deemed necessary for this premises to be rented. If so, then mark the checkbox labeled “Modified Gross.” Additionally, the Lessee and Lessor must initial the blank lines labeled “Tenant’s Initials” and “Landlord’s Initials” (respectively). Two additional sections to this choice will need information.  List all the Lessee’s additional expenses on the first set of blank lines (in the statement “In Addition To The Base Rent…”). Similarly, if the Lessor must pay any expenses to maintain this agreement, then list each one on the second set of blank lines. These expenses may range from utilities (i.e. electricity), services (i.e. waste disposal), or insurance. Please note, that only expenses approved by the law are allowed here. If this is a “Triple Net (NNN)” lease, then mark the third checkbox. Both the Lessor and Lessee will have to initial this choice on the appropriately labeled blank lines (“Tenant’s Initials” and “Landlord’s Initials”). We will have to supply some insurance information to the third item in this lease description (“III. Insurance”). Report how much in single limit coverage of injury on the premises the Lessee must maintain using the first two blank lines.  The next two blank spaces have been reserved to record the single limit coverage amount for the death of a person(s) on the premises the Lessee must maintain to remain in compliance.  Finally, enter the single limit coverage for property damage the Lessee must maintain using the last two blank lines in this item.  The seventh article of this lease, titled “Security Deposit,” will solidify how much the Lessee must surrender as a security amount. This amount will be returned to the Lessee if the requirements of this article are met. Write the security amount in words then enter it numerically on the first and second blank lines of this paragraph. Some tenants may need to make certain alterations to a premises (i.e. a sign or a logo). In the eighth article “Leasehold Improvements,” the Lessee will be held financially responsible for any alterations made to the premises unless they are listed on the blank line in this section. If there is not enough room to list all the alterations/repairs the Lessee will be exempt from paying to undo, then you may attach a clearly labeled addendum. Every lease will need to handle the issue of what happens when the Lessee does not pay the rent and it goes into default. When this occurs, both parties will agree that the lease will terminate and that any actions described in the article “14 Default And Possession” may take place. We will need to complete the language in this article to make it applicable to this agreement. First, locate the statement beginning with the phrase “Rent Which Is In Default For More Than” and enter how many days after the rent’s due date has passed unpaid by the Lessee for the rent to be considered in default on the blank line preceding “Days After Due Date…” Typically, once a late rent payment turns to default, a late fee will be imposed. This agreement will require such a figure to be set in writing. Two checkbox statements have been supplied so that a quick report on the determined penalty can be defined. You will need to choose one. If the late fee will be an interest rate, then mark the first checkbox and report the percentage in words then numerically using the two empty lines in this statement. If the late fee will be a flat dollar amount, then mark the second checkbox. This will require the late fee to be defined on the two blank lines in this statement.

5 – Address Miscellaneous Terms And Governing Laws

There will be some basic laws and terms that apply to some businesses and offices. We shall turn our attention to the article “18. Miscellaneous Terms” to address this subject. The blank line in the second item, “Signs,” will need the name of the Municipality whose laws govern any exterior signs or advertisements put up by the Lessee. In addition to naming the Municipality above, we must record the name of the State whose laws will govern this agreement on the blank line in “22. Governing Law.” We must provide a legal address where each party may use to send notices and payments to one another. In “23. Notices,” record the address the Lessor wishes his or her tenant to use when sending a rent payment or other legal notices on the blank lines under the word “Lessor.” Beneath the word “Lessee,” document the address the Lessor should use when a written notice must be delivered to the tenant (regarding this lease or the leased premises).

6 – Organize The Parties Required For This Execution

The last article, “25. Binding Effect,” will require the direct participation of three parties; the Lessor, the Lessee, and a Notary Public. To begin, we must report the Calendar Date when both parties will have signed this document thus formally entering this agreement and putting it in effect. Enter this as a Colander Day, Month, and Year on the blank lines in the “In Witness Whereof…” statement. The Lessee must sign his or her name to the blank line under the words “Lessee’s Signature” then print his or her name on the adjacent blank line (labeled “Printed Name”). This must be done in the presence of a Notary Public. Next, also under the direction of a Notary Public, the Lessor must sign and print his name on the blank lines labeled “Lessor’s Signature” and “Printed Name.” The remaining two areas are supplied for the use of the attending Notary Public. Two sections each titled “Acknowledgment Of Notary Public” will allow for each party to have a notarized signature presented in case they cannot be in the same room at the time. The Notary Public will determine will supply the required proofs to notarize this signing.


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