Elements that Define a Complete Commercial Lease Agreement in Connecticut

To secure that prime commercial space, to protect your business as it grows, and for amicable dispute resolution in future, you must sign a Connecticut commercial lease agreement, also called a commercial real estate lease agreement or a commercial business lease agreement. It signifies the commitment made by the tenant, and it also indicates that the parties (landlord and tenant or lessor and lessee) have agreed to the terms outlined. Once signed, it’s a legally binding contract that can be presented in court as evidence if need be.

The Difference Between a Commercial And a Residential Lease Agreement

The commercial lease is used by a lessee or tenant when renting out space for running a business while the residential lease allows the renter to rent a space or home to live in. The commercial property leases are more of contracts between two knowledgeable business persons, and they have reduced government protection. The parties of a commercial lease have a higher bargaining power than the tenants who sign residential leases.

• Why Do You Need The Commercial Lease Agreement?

• • An oral agreement is insufficient and unenforceable. If a dispute arises, you’ll need a written contract rather than a verbal one.

  • The written lease is also essential for the protection of your interests while protecting you from financial losses.

Elements of The Commercial Lease Agreement

• Whether you are relocating your office or planning to open a new branch, a commercial lease agreement in Connecticut will be invaluable by reducing the overall risk. All leases must have the names and addresses of the lessor and the lessee. Before you sign it, read through every section of the agreement.

• • Specifications of the Property on Lease

• This section outlines the type of property being leased, its address, and the specifications for size among others.

• • The Intended Use of the Space

• The tenant must specify what they intend to use the space for.

• • Terms of The Lease

First, figure out how long you’ll need the space for. Most leased spaces are on the market for 3-5years. If you need to lease space for only 2 years, finding or negotiating a 2-year lease is advisable. If you run an established business, you might want to negotiate a longer term.

That brings us to the types of leases depending on the duration of the lease:

Fixed-end date leases: in this lease the exact date that the lease ends is predetermined, and the rent is fixed during that time. The lease will not change except for when the landlord includes a clause suggesting future changes and the tenant agrees to the clause.

Fixed Number of Weeks/Months/ Years lease: this lease specifies the duration of the lease in terms of weeks, years or months. The tenancy period lasts as long as the landlord, and the tenant agree.

Periodic lease: this lease lasts for a few weeks, months or years, and it continues until either party terminates the lease. Common periodic leases are monthly. Note that the landlord can increase the rent or change the terms of the initial lease contract is they give adequate notice (30-60days).

Automatic renewal leases: most business leases fall under this category where the lease runs on the agreed terms until the termination of the lease by the landlord or the tenant. With this lease, the contract continues to run on the original terms even after the end of the current term.

• Rent Payable

The lease must have the figure charged for base rent, how often it’s to be paid, and the deadline for the payment. In addition to the base rent, the tenant in the commercial property may pay for the operating expenses for the space. To know the payment module you are signing up for, you need to understand the types of leases available when money is on the table.

Gross Rent Lease

In this commercial lease, a tenant pays fixed rent (the fixed amount might include specific expenses) while the landlord pays the operating expenses associated with the business space.

Net Lease

• This commercial lease is set in such a way that the tenant only pays the specific base rent, and all or some of the operating expenses for the company. The expenses are pro rata, and they include the property taxes, insurance, and CAM (Common Area Maintenance). The net lease may be single, double or triple.

• • Single net lease – tenants pay the base rent and the property taxes

  • Double Net Lease – the tenant pays property taxes and insurance on top of the base rent.

  • Triple net lease – the tenant pays all the operating expenses (property taxes, insurance, and CAM) on top of base rent.

Modified Gross Lease

It’s a hybrid between the gross and the net lease – the tenant and landlord share the cost of the operating expenses.

Percentage Lease

If you run a retail business, a lease requires you to pay the base rent and a percentage of your gross income might be your preferred option.

• Security Deposit

This section of the lease highlights the amount of money the tenant pays the landlord as a guarantee of fulfillment of their obligations in the lease. The amount of the security deposit is stated in the lease as are the consequences of non-compliance, and the return policy for the security deposit.

Other elements covered include the ownership of leasehold improvements, repairs, lease renewal, and whether or not the tenant can sublet the space. Terms for default and possession are also outlined.

To finalize the document, a binding effect is critical. The binding effect is the section with the signatures of the party. It solidifies the contract. To seal the terms of this contract, the lease should be notarized at the notary public. The notary provides the state name, country, date of notarization, and the names of the principle power. The principle (s) of power have to sign their names in the lease including the expected date of the commission’s end.

Looking for a professionally done commercial lease contract in Hartford, New Haven, Bridgeport, Stamford, Danbury, Norwalk, Waterbury or any other city in Connecticut? Get our free Connecticut commercial lease agreement forms online now.