Everything You Need to Know About The Commercial Lease Agreement in Arkansas
A commercial lease agreement signed by you and the landlord is all you need to seal that deal on that prime office space advertised. The agreement is more of a contract, and it acknowledges the fact that the landlord has agreed to lease the premise to you for a specific duration and at a specific rate. It is a sign of commitment, and it prevents future misunderstandings while stating who takes care of inadvertent damages after the lease is signed. It is, therefore, advisable that you take your time when creating a commercial lease agreement. You might want to involve a legal professional before signing it. Also, landlords need to run background and credit checks on their potential tenants before the tenant signs the document or makes a deposit.
The commercial lease agreement is also called a commercial property lease or a commercial real estate lease.
Types of Commercial Leases For Real Estate
Leases vary depending on the duration of the lease and the payment system (Rent and Expenses). An understanding of the types of Arkansas commercial lease agreements will save you a lot of trouble later on.
Fixed end-date leases: these leases have specific contract termination dates.
Fixed number of years/ months/ weeks lease: these leases run for a specific duration of time, and they might be renewed or not depending on the agreement between the tenant and the landlord. Some other terms of the lease might also change during the renewal.
Periodic leases: these leases run for weeks, months or even years and they continue unless terminated by either party. With sufficient notice issued, the landlord might raise the rent or change the terms of the agreement.
Automatic renewal leases: these leases run on terms agreed upon until the landlord, or the tenant decides to terminate the contract. With this type of lease, the contract runs on the same terms negotiated previously, even after the end of the term.
Rent and Expenses Leases
Gross lease: this lease is also called the full service lease because the rental rate negotiated is inclusive of the operating expenses or property taxes of the business premise.
Net lease: in this type of lease, the property’s operational expenses are not inclusive. So, other than the base rent, the tenant pays a pro rata portion of the three main operating expenses namely the property taxes, property insurance, and the common area maintenance (CAM) costs. The most common net lease is the triple net lease (NNN) where the tenant pays the base rent plus all the three operating expenses for the business premises. You might also come across single net leases (Property tax and base rent) or the double net lease (Property taxes, property insurance, and the base rent).
Modified lease: it’s a hybrid of the gross and the net lease. The landlord and tenant have to agree on who pays what portion of the operating expenses.
Percentage lease: this is a unique lease common with retail businesses. It outlines that the tenant will be paying a percentage of their gross income on top of the base rent.
Information Necessary For The Validity of Your Lease Agreement
Before you sign a commercial lease agreement in Arkansas, you must read through the provisions of the agreement to understand how the provisions will impact your business. These provisions include:
Date (day, month, and year) that the lease agreement is created
The names and addresses of the landlord and the tenant
The address and specifications of the property on lease
The duration of the lease including the start date for the lease and the end date.
The monthly or quarterly rent charged and when it’s due. This section will also highlight how the tenant will pay the rent, the length of the grace period for late payments, and the amount charged in late fees.
The amount charged as the security deposit and the conditions for the return of the deposit.
There also are terms that define the conditions for premise improvement and signing. Note that you should also ask for clarification on parking spaces and whether or not modifications are acceptable.
Note: According to the Americans with Disabilities Act, a commercial real estate lease should indicate that the commercial property lessee with business open to the public and one that hires at least 15 employees should keep its doors widened or have ramps installed. The party responsible for these modifications should be named in the lease.
Lastly, the landlord and the tenant have to sign the document against their printed names to signify their commitment to the terms of the lease. In most cases, the acknowledgment of the lease is done in the presence of the notary public.
Failure to prepare and sign a commercial property lease agreement could spell financial loss and mental anguish to the landlord and even the tenant. To avoid any of that from happening in Little Rock, Fayetteville, Hot Springs, Bentonville, Jonesboro and any other city in Arkansas, download our free commercial lease agreement form today.