Terms and Types of Commercial Lease Agreements in Louisiana
Looking for a favorable commercial lease agreement in Louisiana but you don’t understand the intricacies of the leases? We’ve got you?
We understand that it’s easy to sign a piece of paper when you find a prime location for your office or shop, but taking landlords to court for unreasonable terms is not only expensive but also embarrassing when you feign ignorance. Understanding the terms of the lease also helps in negotiating for better terms. So, let’s get started.
A commercial lease agreement refers to a legally binding contract that outlines the fact that the landlord of the commercial space or the lessor has given the tenant or lessee the rights to use the commercial space for a named activity. The contract is time-specific, and rent is payable in exchange for the use of the space.
The contract is also called a commercial property lease agreement or a business lease agreement.
Unlike the residential leases which spells out the contract between the landlord and tenant in the residential property, the Louisiana commercial lease agreement and consequently the property will receive less protection from the government. As a result, you have to review what you are signing before you do.
This is the base or the minimum amount of rent set out in leases. It’s exclusive of operating expenses and maintenance costs.
Types of Lease
1. Gross Rent Lease
This lease allows the tenant to pay a fixed and predetermined amount of money periodically (weekly, monthly or quarterly). Sometimes, this fixed amount includes operating expenses. But the landlord pays the expenses associated with maintenance and operation of the property like insurance, utility and even taxes.
2. Net Lease
This type of commercial lease applicable across the board in commercial settings (industrial properties, warehouses, and retail stores). The tenants pay the base rent and a portion or all of the operating expenses. The net lease can be single, double or triple.
The triple lease is common, and it involves having the tenant pay for property taxes, insurance, and common area maintenance (CAM) on top of the base rent. The tenant also pays for the utilities and janitorial services. Note that other than the base rent which is payable to the landlord, the other expenses are payable to the service providers directly.
Single net leases transfer the cost of taxes to the tenant on top of the base rent, while the double leases allow renters to pay the base rent, property taxes, and property insurance.
3. Modified Gross Lease
This lease is a hybrid between the net and gross lease. In this case, tenant pays the property’s base rent and a shared portion of the operating expenses.
4. Percentage Lease
In this lease, the tenant will pay the base rent, as well as a percentage of their gross income.
5. Fixed End Date Lease
This lease has a predetermined end date agreed upon by the landlord and the tenant. Since the end date is specific, neither party has to issue a tenancy termination notice at the expiry of the current lease. This lease is also advantageous with the landlord refrained from increasing rent or altering the terms of the agreement unless they reserve the right to change the lease and the tenant signs up for the terms.
6. Fixed Number of Weeks/ Months/ years Lease
This end date of this lease is limited to a specific week, month or year and the lease will run until the end of that time, say 108 weeks or 18 months. To terminate the lease, the tenant or landlord has to issue a notice. Like the fixed end date lease, the landlord signing up for this type of lease cannot change the terms of the lease or increase the rent they charge unless the tenant agreed to an express reserve in the lease agreement.
7. Periodic Lease
The periodic lease could be a weekly, monthly or yearly lease that you can renew automatically. The lease runs for an unspecified duration until one party terminates it. For termination, the landlord or the tenant has to issue a written tenancy termination notice. With this lease, the tenant can raise rent charged or even change the terms of the agreement by providing a notice as required by the statutes. Eviction follows if the tenant fails to move out at the end of the eviction notice period.
This is the sum of money payable to the landlord as a guarantee that the tenant is committed to fulfilling the obligations outlined in the lease. By holding the security deposit, the landlord is assured that the tenant will not default on the terms of the agreement, neglect or damage the property.
Subleasing a Lease
This happens when the rights to use a commercial property under the lease are transferred to a third party by the current tenant for part of the remaining term of the property’s lease. To transfer all those rights, you have to assign the lease to the third party.
Elements of a Commercial Lease Agreement
Type and specifications of the rented property
The terms of the tenancy
Type of business that can be conducted in the premise
Ownership of leasehold improvements
Provisions for leasehold renewal
If you are looking for a commercial lease in New Orleans, Baton Rouge, Shreveport, Lake Charles, Alexandria, Ruston, Bossier City or any other city in Louisiana, download our free commercial lease agreement forms now.