Commercial Leases 101 for Business Owners

 Posted on October 08, 2024 in Business Formation

The right commercial property can be crucial to a business’s success. Just as important is ensuring that the terms of the commercial lease protect you and your business. Commercial lease agreements present a host of unique and complex considerations, unlike those of residential leases. Considering the significant expense at stake when leasing commercial property, a knowledgeable Texas commercial lease attorney can assist business owners and entrepreneurs in protecting their interests when signing a commercial lease.

What is a Commercial Lease?

A commercial lease can encompass various property types, from office spaces to warehouses to restaurants and retail storefronts. The terms of a commercial lease agreement will vary widely depending on the type of property and need to be tailored accordingly.

Commercial leases are also subject to fewer legal protections than residential leases and are harder to break. Depending on relevant zoning laws, they may be used solely for a business purpose. On the plus side, commercial lease terms can be very flexible and customizable to specific business needs. Commercial leases also tend to have longer terms than residential leases.

What are the Types of Commercial Leases in Texas?

• Gross Lease: The simplest type of commercial lease, in which the tenant pays a fixed monthly sum for rent, inclusive of utilities, cleaning services, taxes and more. This type of lease is preferred by entrepreneurs who want to budget their costs strictly. 
• Percentage Lease: This type of commercial lease, like the gross lease, is preferred by office buildings, retail spaces, and restaurants. The tenant pays a fixed rate plus operating expenses and pays a percentage of the business’ monthly gross sales that take place on the property.
• Net Lease:  The net lease is preferred by landlords. The tenant pays the base rent plus a proportional share of the building’s operating costs. 

Legal and Drafting Considerations For Commercial Leases

The terms of a commercial lease will vary depending on the needs of the business and the type of property. Some important considerations to address in the contract include: 

• Additional costs: A commercial lease should address additional costs, such as the security deposit.
• Exclusive use: Business owners may negotiate an exclusive use contract that gives them exclusive rights to open their specific type of business on the property. For example, a salad chain may negotiate that the landlord may not rent any space in the building to another salad establishment.  
• Property taxes: Unlike residential leases, in commercial leases, the tenant may be responsible for paying the property tax, which should be addressed in the lease.

Speak With a Fort Worth, TX Commercial Lease Lawyer

Commercial leases involve a substantial investment and tend to have longer lease terms. At Gonzalez Law, PLLC, we can advise you on the business and legal implications of commercial leases. Schedule a free consultation with a Fort Worth, TX commercial lease attorney by calling 817-349-7330 today.