Building Lease

Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 3,979 reviews

Jump to Section

Need help with a Building Lease?

CREATE A FREE PROJECT POSTING
Post Project Now

What is a Building Lease?

A building lease is a legal contract used by landlords and tenants to formally agree on the rental terms of commercial buildings that are used for office, industrial, or retail purposes. Landlords receive payments from their tenants in return for being able to use the commercial property for their business as needed.

A building lease differs from a residential real estate lease because the tenant is expected to use the property solely for business operations instead of everyday living. The space a business uses for their daily tasks is referred to as ‘demised premises’ because it is not a whole real property but is actually space within real property.

A building lease is known to be referred to as other names including:

  • Business lease
  • Industrial lease
  • Office space lease
  • Commercial lease

How Building Leases Work

Building leases work by allowing an individual or company with a legitimate business to rent building space. These leases result in agreements for the tenant to use the property for approximately 3-5 years as long as the rent payments are made on time and in the full amounts agreed upon. A building lease can be renewed if desired once it ends as long as both parties agree on the new rate being offered by the landlord.

Businesses that you may see most days such as restaurants, factories, self-storage facilities, office buildings in the city, small shops, and shopping centers likely do not own the property they conduct business out of. Instead, they chose to become a party to a commercial lease because it is likely cheaper for them then outright purchasing a building.

Choosing a commercial lease for your business will allow you to discuss options with your landlord as far as the term of the contract, amount and due dates of payments, and individual responsibilities. This type of lease is good for a business owner who may not want to get stuck in a particular area before testing the success of their services. A tenant may not wish to stay in the same location for very long and a building lease offers flexibility.

Meet some lawyers on our platform

Bryan B.

97 projects on CC
View Profile

Matthew S.

2 projects on CC
View Profile

Ryenne S.

127 projects on CC
View Profile

Gregory B.

80 projects on CC
View Profile

Common Types of Commercial Leases

The most common types of commercial leases are listed below with descriptions:

  • Full Service/Gross Lease: A full service, or gross, lease provides that operating expenses, insurance, maintenance costs, and real estate taxes are included in the base rent so no extra payments are needed from the tenant. The landlord does have the right to require the tenant to pay additional fees and dues if there are increases in the future though, but this would need to be expressed in an understandable way.
  • Net Lease: A net lease is the complete opposite of a full-service lease because no operating expenses, taxes, insurance, or maintenance fees are included in the base rent, so the tenant is sometimes obligated to pay all of them separately.
  • Single Net Lease: The tenant pays for just the real estate taxes outside of the base rent.
  • Double Net Lease: The tenant pays for just the property taxes and insurance outside of the base rent.
  • Triple Net Lease: In a triple net lease , a tenant pays for real estate taxes, property insurance, and area maintenance (known as CAM).
  • Modified Gross Lease: A modified gross lease is a mixture of the full service and net lease principles. A tenant who is part of this type of lease shares responsibilities of paying operating or other fees with the landlord. The tenant and landlord come to an agreement on who will pay for what and have the opportunity to negotiate if there is a dispute that arises.
  • Percentage Lease: A percentage lease requires a tenant to pay a percentage of their gross business proceeds at the end of each month in addition to the base rent. This may not be a great option for business tenants who do not want to share their earnings.

To read more about the types of commercial leases that exist, visit this website .

ContractsCounsel Building Lease Image

Image via Pexels by Daria

Key Content to Include in a Building Lease

For a building lease to be qualified as such, it should contain the following content at a minimum:

  1. Parties. The identities of the landlord and tenant should be stated near the beginning of the building lease. The roles of each party should be listed near their names. It is possible the business names relating to the tenant and the landlord, if it applies, should be included too.
  2. Duration. The number of years, months, weeks and/or days that the lease will be good for should be clearly expressed to avoid confusion. The anticipated start and end dates should be listed. This section should also state whether there will be an automatic renewal if the tenant does not inform the landlord within a specific time period prior to the end of the current lease that they will be moving their business elsewhere.

It needs to be stated whether there are exceptions to the end date or an early termination allowance and what situations will permit or lead to them.

  1. Demised Premise. This section needs to describe the rental space being rented to the tenant in detail. Since this lease is for a business property, the document needs to state what other features are available to the tenant such as parking lots, snow removal, security services, janitor help, and temperature control.
  2. Real Property. A description of the real property that the demised premise is in needs to be mentioned and all common areas should be discussed.
  3. Base Rent & Deposit. The amount of rent to be paid to the landlord must be included in this building lease as well as the frequency of these payments. The amount of the security deposit to be made by the tenant has to be in the contract along with when it is due and whether it can be returned at the end of the lease.
  4. Operating Costs. This section will cover what costs in addition to the base rent the tenant is required to pay to the landlord and how often. How and where the tenant needs to make the payments should be included also.
  5. Property Use and Occupancy. This part of the document will go through what is and is not allowed to happen on the property premises. It will describe who is expected to occupy the rented space and what basic business operations will take place there.
  6. Improvements. In any scenario the property being used for business may end up needing improvements that are costly, especially if operations involve consistent cooking or other messy tasks. This section should state which party will pay for the improvements and if their financial responsibility will be capped at a certain amount.

How Are Building Lease Payments Calculated?

Building lease payments are calculated by setting a price for each square foot ($/SF) and multiplying that amount by the amount of square feet that exist in the rental space. The price can be high or low depending on what buildings in your area are charging, because landlords want to stay on board with the commercial property market.

Calculations are not always the same because sometimes property insurance, maintenance costs, and tax dues are included in the price and other times they are not. There may also be miscellaneous things included or excluded based on the area of the rental as well as the type of lease.

Get Help with a Commercial Lease Agreement

Get assistance drafting or reviewing a building lease by working with real estate lawyers who specialize in these types of contracts. Post a project in ContractsCounsel’s marketplace and get free bids from vetted lawyers for your project.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Building Lease Lawyers

Orin K. on ContractsCounsel
View Orin
5.0 (3)
Member Since:
October 24, 2021

Orin K.

Partner
Free Consultation
Get Free Proposal
New York
19 Yrs Experience
Licensed in NY
New York Law School

I'm an employment lawyer. I counsel and represent employees in all professions, from hourly workers to doctors and executives, and all in between. I also counsel and represent employers in many aspects of employment law.

Scott S. on ContractsCounsel
View Scott
4.9 (14)
Member Since:
October 26, 2021

Scott S.

Attorney
Free Consultation
Get Free Proposal
New York, NY
16 Yrs Experience
Licensed in NY
Benjamin Cardozo School of Law

Scott graduated from Cardozo Law School and also has an English degree from Penn. His practice focuses on business law and contracts, with an emphasis on commercial transactions and negotiations, document drafting and review, employment, business formation, e-commerce, technology, healthcare, privacy, data security and compliance. While he's worked with large, established companies, he particularly enjoys collaborating with startups. Prior to starting his own practice in 2011, Scott worked in-house for over 5 years with businesses large and small. He also handles real estate leases, website and app Terms of Service and privacy policies, and pre- and post-nup agreements.

Michelle F. on ContractsCounsel
View Michelle
Member Since:
January 24, 2022

Michelle F.

Attorney
Free Consultation
Get Free Proposal
New York
5 Yrs Experience
Licensed in NY
Touro College Jacob D. Fuchsberg Law Center

I provide comprehensive legal and business consulting services to entrepreneurs, startups and small businesses. My practice focuses on start-up foundations, business growth through contractual relationships and ventures, and business purchase and sales. Attorney with a demonstrated history of working in the corporate law industry and commercial litigation. Member of the Bar for the State of New York and United States Federal Courts for the Southern and Eastern Districts of New York, Southern and eastern District Bankruptcy Courts and the Second Circuit Court of Appeals. Skilled in business law, federal court commercial litigation, corporate governance and debt restructuring.

Steve C. on ContractsCounsel
View Steve
Member Since:
October 26, 2021

Steve C.

Principal | Attorney
Free Consultation
Get Free Proposal
Irvine
24 Yrs Experience
Licensed in CA
Loyola Law School

I am a corporate and business attorney in Orange County, CA. I advise start-ups, early-growth companies, investors, and entrepreneurs in various sectors and industries including technology, entertainment, digital media, healthcare, and biomedical.

Oscar B. on ContractsCounsel
View Oscar
Member Since:
October 28, 2021

Oscar B.

Attorney
Free Consultation
Get Free Proposal
Saint Petersburg, FL
21 Yrs Experience
Licensed in FL
Stetson University, College of Law

Oscar is a St. Petersburg native. He is a graduate of the University of Florida and Stetson University, College of Law. A former US Army Judge Advocate, Oscar has more than 20 years of experience in Estate Planning, Real Estate, Small Business, Probate, and Asset Protection law. A native of St. Petersburg, Florida, and a second-generation Gator, he received a B.A. from the University of Florida and a J.D. from Stetson University’s College of Law. Oscar began working in real estate sales in 1994 prior to attending law school. He continued in real estate, small business law, and Asset Protection as an associate attorney with the firm on Bush, Ross, Gardner, Warren, & Rudy in 2002 before leaving to open his own practice. Oscar also held the position of Sales & Marketing Director for Ballast Point Homes separately from his law practice. He is also a licensed real estate broker and owner of a boutique real estate brokerage. As a captain in the US Army JAG Corps, he served as a Judge Advocate in the 3rd Infantry Division and then as Chief of Client Services, Schweinfurt, Germany, and Chief of Criminal Justice for the 200th MP Command, Ft. Meade, Maryland. He is a certified VA attorney representative and an active member of VARep, an organization of real estate and legal professionals dedicated to representing and educating veterans. Oscar focuses his practice on real small business and asset protection law.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call