Free New York Commercial Lease Agreement


Things You Should Review Before You Sign Your Commercial Lease Agreement in New York

A commercial lease agreement refers to a written legal contract that creates a contractual relationship between the property’s owner/ Management Company or landlord and a tenant or the entity looking to rent the business property or commercial space. The landlord will be paid monthly rent for giving the tenant the right to use the property. This lease agreement is also called a commercial property lease agreement or a commercial rental agreement.

Being legally binding, it is important to understand all the terms of the lease as applicable. While the lease agreement is expected to offer both parties some level of protection, you should not assume that there is a standard commercial lease agreement prepared to favor you. Standard documents are often exclusive of some critical elements.

Location

Before making a lease application, choose an appropriate location for your business. The location selected should meet your business needs, it should be within budget, with a good client base, favorable programs, and you should also check the zoning rules. You should also take note of the location of your potential competitors and the level of human traffic in the location.

Basically, you are looking for commercial space that will meet your business needs. The best way to do this involves checking the space, and the business facilities present then to determine whether or not the space and the available facilities meet your needs or not. Some of the things you should consider include the presence of a waiting room, a reception, library, kitchen, lighting, security, accessibility by people with disabilities, and associated spaces, among others.

Taking into account all these elements of the space will help you determine the operating costs associated with the space, helping you determine the suitability of the space.

Don’t forget to confirm the ownership of the premise or to verify the applicable zoning restrictions.

You also need to check the description of that space. For this, ask for architectural drawings.

Rent payable

Total rent asked by the landlord is always negotiable. And since there is no standard for rent or regulation for commercial rent charged, don’t accept the first figure thrown your way. Note, however, that specific elements like the market rates will determine how much rent is charged, and how much is deemed the standard figure. Keep in mind that the rent goes up annually as per the contract.

  • You also need to know that the rent payable in total varies depending on the type of lease you sign. There are four main types of commercial leases recognized statewide and in the commercial rental agreement. They include:

    • Gross/ Full-Service Lease

  • In this lease, the tenant pays for the base rent only, and the landlord pays for everything else. In this case, everything else includes the property taxes, insurance, CAM (common area maintenance), and general property upkeep. Note that this is the least common type of lease contract.

    • Net Lease

This can be a single, double or a triple net lease.

Single net lease: it’s an old type of lease where the tenant pays the base rent in addition to property taxes. The tenant pays for their own upkeep, utilities, and janitorial services.

Double net lease: this is another rare type of lease where the tenant pays the base rent in addition to the property taxes and the insurance premiums.

  • Triple net lease: most landlords prefer this lease because it passes all the occupancy costs to the tenant: the property taxes, insurance premiums, CAM, utilities, janitorial services, and all other costs.

    • Modified Gross Lease

  • This is a hybrid of the gross and the net lease. It is common, and it’s characterized by the landlord paying the taxes, insurance, and CAM, with the tenant paying the base rent and their individual expenses.

    • Percentage Lease

In this arrangement, a tenant pays a percentage of their gross income on top of the base rent.

Security Deposit

This is the other element of the rent. Typical security deposit asked is 2 or 3 months’ worth of rent.

Free Rent

This is a negotiable period during which the landlord allows the tenant to use the space rent-free or at a lower fee. The period lasts between 2 and 6 months.

Holdover

If you don’t move out of the commercial space after the term expires, you have to pay for high rent. During a holdover period, the rent charged can be 1.5 or up to 2 times the original base rent charged.

Lease Term

The lease term may be fixed or periodic. With a fixed term lease, the end date is known, and the lease is not renewable. The periodic lease is, however, without an end date but the tenant has an option of renewing the lease.

Before signing your New York commercial lease agreement, know that you do not have legal rights to lease renewal, unless when the clause ‘Option to Renew’ is included in the lease. If the clause is present, the amount of rent payable after lease renewal should be indicated.

Before signing the lease and paying money, confirm that the lease differentiates the commencement date from the effective date. Though used interchangeably in some cases, the effective date (Date of signing) is often different from the commencement date (start of business operations) because you might have to alter and improve the space before you begin operations.

However, the rent commencement date and the commencement date may be similar.

Lease termination terms

Before signing the lease, confirm that the termination terms are favorable and that the landlord will not terminate your lease if they decide to sell, rehabilitate, or demolish the building.

  • Elements that lack statutory protection

    • The Duty to Mitigate

    • Warranty of habitability

    • Subleasing and Assignment

Note: after reviewing the lease, know that the preparation of the commercial lease agreement in New York takes place in four main steps. They include downloading the lease agreement form, reading and filling in the details of the tenant and the landlord, agreeing to the articles in the lease, and signing the commercial property lease agreement.

If you are interested in a lease agreement in New York City, Albany, Rochester, Syracuse, Yonkers, Buffalo, or any other city in New York, download our free commercial lease agreement forms to get started today.