Lease Terms

Jump to Section

Need help with a Lease Terms?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

Lease terms are vital to understand and negotiate with future tenants. Offering the wrong types of leases or lease terms can obligate you to meet responsibilities you didn’t originally intend to handle. The right lease terms can also protect your legal rights and foster a positive relationship between you and commercial renters.

In this article , we cover everything a commercial landlord would want to know about lease terms and how they affect your commercial lease agreements :

What are Lease Terms?

Lease terms are the contract terms of a lease agreement between a lessee, usually the tenant, and a lessor, typically the landlord. The legal contract includes lease terms to establish the period of time by which the lease will last, contractual obligations, and more.

What’s Included in Normal Lease Terms?

It’s essential to approach commercial lease negotiations with a firm grasp of the meaning of your terms. Standard commercial lease clauses include vital and anticipated conditions. Not including them could signal to prospective tenants that your office or building space may not be the right legal fit for them.

Commercial landlords typically include the following terms in a normal lease :

  • Parties . Identify the parties correctly since incorrect identification can result in severe legal headaches should a dispute arise later. Listing someone’s name has a much different impact than using their LLC . For example, signing a lease with a person versus their business means it could be harder to collect on defaulted rent in some situations.
  • Premises . The premises clause identifies the property that the lessee will rent. If you’re leasing an entire commercial building, you can insert the street address and building name. On the other hand, renting office space requires landlords to be more specific when describing what rent includes, such as suite number, amenities access, and more.
  • Use . A use clause establishes the parameters for what activities you will allow in the rented space. The restrictions can be as broad or as specific as you prefer. In general, you should avoid placing severe restrictions on your use of the rented space since it could deter well-qualified tenants.
  • Term Length . The term length clause details the duration of the lease and termination dates. According to Business News Daily, the average commercial lease term lasts three to five years.
  • Rent . Monthly rent is critical to negotiating with prospective tenants before drafting the lease agreement. Carefully draft the lease clauses to determine to account for security deposits, utilities, office rent, and more.
  • Modifications . A significant portion of your lease should address this topic if a tenant needs space modifications. You and the lessee will need to agree on designers, work performances, project completions, and obligations.
  • Amenities . Amenities clauses in the lease are likely to address practical arrangements you have with your tenants, such as parking and business signs. While negotiating these terms, you and the tenant attempt to integrate your business needs seamlessly. When executed well, these amenities will add to the success and convenience of a tenancy for both parties.
  • Insurance . Insurance products are available to help tenants pay for the risks associated with commercial leasing, including liability insurance, should an unanticipated issue arise. You’ll need to consider which types of insurance are appropriate for your target tenancies so that you have the correct terms prepared in your commercial leases .
Meet some lawyers on our platform

Jonathan G.

2 projects on CC
View Profile

Scott S.

3 projects on CC
View Profile

Kristen R.

1 project on CC
View Profile

Daehoon P.

7 projects on CC
View Profile

Types of Commercial Leases

The types of commercial leases you offer tenants significantly impact your future responsibilities. There are several distinct types of commercial leases. Understanding how each one works will empower you to make informed decisions about potential arrangements

Types of commercial lease agreements include :

  • Single Net (N) Leases . Single net (N) leases, or net lease , require tenants to pay some or all of the property taxes, while the landlord is responsible for property insurance and maintenance. A landlord might use this agreement to save money on property taxes or ensure they can pay property taxes on time. Apart from this advantage, the landlord receives few benefits and remains responsible for most of the building’s operations.
  • Double Net (NN) Leases . Double net (NNN) leases are used when the tenant is responsible for some or all property taxes and insurance. The landlord is responsible for all maintenance and repair costs, like in a single-net lease. This option is a more common type of commercial lease in multi-tenant buildings.
  • Triple Net (NNN) Leases . Triple net (NNN) leases are when the tenant pays for all or some property taxes, insurance, and maintenance. This type of lease offers landlords several advantages, including remaining more “hands-off,” which allows for more freedom. However, it’s essential to remember that base rents will be much lower to offset the tenant’s obligations.
  • Absolute NNN Leases . NNN absolute leases are the opposite of a gross lease, which include all expenses. Under the absolute NNN lease, the tenant is responsible for all property costs and assumes all possible risks under this arrangement. This type is the least common of commercial leases, as few tenants are willing to assume such a high level of risk. While this lease effectively allows them to own a building without purchasing it, they bear all the risk and do not benefit from the property’s appreciation in value.

ContractsCounsel Lease Terms Image

Image via Pexels by RODNAE Productions

Gross Lease vs. Net Lease

Gross leases are full-service leases since tenants pay a share of expenses proportionate to the building. In contrast, a net lease requires the tenant to pay rent and other costs associated with owning, operating, and maintaining the property.

Let’s take a closer look at gross leases vs. net leases separately for a better understanding of the differences:

What Is a Gross Lease?

Gross leases are ones in which all incidental tenant expenses are built into the rent amount. Other expenses, such as property taxes, insurance, and utilities, fall under a gross lease’s terms. A gross lease is great for commercial office leases.

What Is a Net Lease?

Net leases are lease agreements in which the tenant pays a portion or all of the property’s taxes, insurance, or maintenance costs in addition to the base rent. They are popular in commercial lease agreements for entire building office leases since they make management more automated while still benefiting from property ownership.

Other Terms to Know in Commercial Leases

Another essential term to understand is the idea of lease vs. rent since the two terms are very different. The primary difference is the term period they cover. Lease agreements tend to last in 12-month periods for up to five or ten years. Rental agreements are much shorter and typically last only thirty days.

It is also worth noting that residential lease agreements typically use the term rent. It is perfectly acceptable to create a rental agreement in this situation. You can refer to your document as a lease agreement for commercial tenants, regardless of the period offered.

Get Legal Help with Lease Terms

If your business needs legal help with lease terms, work with commercial lease lawyers to offer legal advice on how to negotiate a commercial lease and finalize the proper documents. Connect with a legal professional for commercial lease help in your state today.

Post a project in ContractsCounsel’s marketplace to get flat fee quotes from lawyers to review and compare. All lawyers in our network are vetted by our team and peer-reviewed by our customers for you to explore before hiring.

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 Lease Terms Lawyers

ContractsCounsel verified
21 years practicing
Free Consultation

The Law Office of George K. Fuiaxis, from the very beginning in 2002, has built a reputation with its clients as an unmatched, diligent, hands on law practice that is always on duty to find the best course of action for its clients. With a supreme pledge of exceptional service to its clients in the areas of Real Estate (Commercial & Residential), Loan Modifications, Intellectual Property, Corporate Law & Business Transactions, Wills, Trusts & Estates, the Law Office of George K. Fuiaxis creates solutions for the many faceted problems faced by its clients. The office represents several various clients, including well known lending institutions, foreign and domestic corporations, sellers and buyers of residential and commercial real estate, residential and commercial landlords and tenants, well known restaurant and business owners, automobile dealerships, airline companies, well known fashion, sports and entertainment industry individuals and corporations, information technology (IT) startups and well known IT companies.

ContractsCounsel verified
Immigration Attorney
5 years practicing
Free Consultation

Mr. Muhammed Uzum represents corporate clients and their employees as well as individuals in all aspects of U.S. immigration, nationality, and consular processes. Mr. Uzum’s core immigration practice focuses on strategizing and filing E-2, E-1, L-1, and EB-5 applications. His area of expertise includes responding to complex H-1B RFEs, PERM Audits, and Appeals. He also advises clients in obtaining employment-based green cards as well as self-petitions through EB-1 and NIW applications. Mr. Uzum also has vast experience in a variety of other non-immigrant visa matters including B-1, F-1, P-3, E-3, and TN filings.

ContractsCounsel verified
Outside Counsel
27 years practicing
Free Consultation

I'm a business law generalist with over 24 years of experience, including as in-house General Counsel, as outside counsel through my own firm and as an attorney in an Am Law 100 law firm. My employers and clients uniformly appreciate my ability to (i) negotiate and close transactions quickly and effectively, and (ii) to make the complex simple. Among other things, I can efficiently assist you on entity formation, governance, and structure; HR issues; mergers and acquisitions; and the negotiation and drafting of all types of commercial contracts. I'm the proud recipient of multiple Martindale-Hubbell Client Distinction Awards given only to the top 5% of attorneys for quality of service.

ContractsCounsel verified
Business Attorney
15 years practicing
Free Consultation

Strategic thinking business minded Outside General Counsel here to help you with your company. I have been able to help guide business owners from startup through series A, B, & C funding and ultimately IPO's. Regardless of your plans I am here to help you succeed as you grow your business.

ContractsCounsel verified
Principal Attorney
18 years practicing
Free Consultation

Daliah Saper operates a cutting-edge internet and social media law practice that regularly leads local and national media outlets to solicit her commentary on emerging internet law issues involving cyberbullying, sexting, catfishing, revenge porn, anonymous online defamation, domain name and user-name squatting, privacy, and the latest business decisions made by social media platforms such as Facebook, Twitter and YouTube. As a litigator Daliah represents companies bringing or defending business and intellectual property disputes. (She has argued cases in a number of jurisdictions including taking a case all the way to the Illinois Supreme Court.) As a transactional lawyer she helps clients choose the right business entity, drafts contracts and licensing agreements, advises on sweepstakes and contest rules, and ensures website terms of use and privacy policies are compliant, and provides comprehensive trademark and copyright counseling. Since founding Saper Law Offices in 2005, Daliah has been named a 40 Under 40 by Law Bulletin Publishing Co., a top Media & Advertising attorney by Super Lawyers Magazine 14 years in a row, and has been repeatedly recognized as a leading media and entertainment lawyer by Chambers and Partners. For the past eleven years, she also has taught entertainment and social media law at Loyola University Chicago School of Law.

ContractsCounsel verified
11 years practicing
Free Consultation

Mr. Mehdipour attended the University of California San Diego where he received his degree in political science. After graduating from UCSD, Mr. Mehdipour attended Southwestern University School of Law where he received his JD. Upon passing the bar, Mr. Mehdipour gained invaluable experience both in a law firm and business setting. Mr. Mehdipour uses his prior business and legal experiences to negotiate the most advantageous results for his clients.

ContractsCounsel verified
15 years practicing
Free Consultation

Alen Aydinian is a versatile attorney with over a decade of experience working with business owners and real estate professionals. Client engagement is central to a successful attorney/client relationship. Alen personally manages all client relationships so that his clients can see how their interests are being served at every stage of the process.

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