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Commercial Lease Agreement

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COMMERCIAL LEASE AGREEMENT

THIS AGREEMENT made, entered into and executed this the day of , by and between (hereinafter "Lessor"), and (hereinafter "Lessee"). Lessor and Lessee contract and agree as follows:

1. Lessor hereby leases unto Lessee the following land and any improvements thereon (hereinafter "the leased property"):

2. The term of this lease shall be for a primary term of years, commencing on and expiring at midnight on unless extended as provided for herein. This lease can be extended at the end of the primary term for an additional term of years by Lessee giving Lessor notice of his intent to extend the lease thirty (30) days prior to the expiration of the primary term.

3. During the primary term, Lessee shall pay to Lessor, as rental, the sum of of each year. During any extended term, Lessee shall pay to Lessor, as rental, the sum of Dollars ($) per year, in advance, on or before of each year. Dollars ($) per year, in advance, on or before

4. The leased property may be used for the following purposes and for no other purposes:

5.

(A) Indemnity: Lessor and Lessee shall indemnify and save harmless the other from any and all losses, fines, suits, damages, expenses, claims, demands and actions of any kind resulting from their negligence, breach, or violation or non-performance of any condition hereof.

(B) Insurance: Lessee shall, during the entire term of the Lease keep in full force and effect a policy of public liability insurance with respect to the Property and the business operated by Lessee in the Property and which the limits of general liability shall be in the amount of Dollars ($) combined single limit, naming Lessor as additional insured. Such coverage shall include a broad form general liability endorsement. The policy shall contain a clause that the Lessee will not cancel or change the insurance without first giving the Lessor ten (10) days prior written notice.

Lessor shall during the term hereof, at it's sole expense, provide and keep in force insurance on the building against loss or damage by fire and extended coverage, in an amount equal to one hundred percent (100%) of the full insurable value thereof, which insurance shall be placed with an insurance company or companies approved by Lessor and licensed to do business in the state wherein lay the leased premises. The term "full insurable value" shall mean actual replacement value of the building (exclusive of costs of excavation, foundations and footing below ground level). The insurance required under this paragraph shall be carried in the name of the Lessor and Lessee and shall provide that any proceeds thereunder shall be paid to Lessor and Lessee and any applicable mortgage holder, according to their respective interests.

Duplicate originals or certificates of insurance of the policies provided shall be furnished by Lessor and Lessee to each other and shall contain an agreement by the insurer that such policy or policies shall not be canceled without at least ten (10) days prior notice to the Lessor and Lessee.

Lessee shall pay all taxes assessed against all personal property located on the premises and shall also pay all privilege, excise and other taxes duly assessed. Lessee shall pay said taxes when due so as to prevent the assessment of any late fees or penalties.

6. Lessee shall pay for all water, electricity, and other utilities used on the premises.

7.

(A) Lessor's Repairs: Lessor shall be solely responsible for maintaining the roof, foundation and exterior of the building and all parking areas in good repair for their intended use.

(B) Other Repairs: All repairs, maintenance, replacement or reconstruction to the interior of the portion of the building leased by Lessee, including but not limited to replacement of glass doors and windows and repair of the plumbing, are to be made by Lessee at Lessee's expense. If Lessee fails to make such repairs or replacements promptly or within fifteen (15) days of occurrence, Lessor may, at its option, make such repairs or replacements and Lessee shall repay the costs thereof to Lessor on demand.

8. Lessee will keep the leased property in a clean and wholesome condition and will comply at all times with all lawful health and police regulations.

Lessee shall promptly comply with all of the ordinances of the City of or of any other governmental body applicable for said premises and to all ordinances and requirements enforced by the state board of health, sanitary, fire or police departments of the City of for the correction, prevention and abatement of nuisances in and about or connected with the Property because of Lessee's use thereof during the term of this Agreement, all at Lessee's expense. Lessee shall provide for the removal of its own trash, waste paper, boxes and cartons and shall not permit any accumulation of such materials. Lessee shall not engage in any act which shall constitute a nuisance.

9. If Lessee shall make default in the payment of the rent, or any part thereof or any other sums due under the terms hereof, when due as herein provided, or in any of the other covenants, agreements, conditions or undertakings herein contained, and such default shall continue for thirty days after notice thereof in writing to Lessee, or if (a) any proceeding under the bankruptcy act of the United States is begun by or against the Lessee, and an order of adjudication, or order approving the petition, be entered in such proceedings, or (b) a receiver or trustee is appointed for substantially all of the Lessee's business or assets, or (c) if Lessee shall make an assignment for the benefit of creditors, or (d) if Lessee shall vacate or abandon the leased property, then, and in any such event, it shall be lawful for the Lessor, at his election, to declare the term hereof ended and to re-enter the leased property, and to repossess and enjoy the said premises and any buildings and improvements situated thereon without such a re-entry and repossession working a forfeiture of the rents to be paid and the covenants to be performed by the Lessee during the full term of this agreement. If any default shall be made in any covenant, agreement, condition, or undertaking which cannot with due diligence be cured within a period of 30 days, and if notice thereof in writing shall have been given to the Lessee, and if the Lessee, prior to the expiration of 30 days from and after the giving of such notice, shall commence to satisfy the cause of such default and shall proceed diligently and with reasonable dispatch to take all steps and do all work required to cure such default, then the Lessor shall not have the right to declare said term ended by reason of such default; provided, however, that the curing of any default in such manner shall not be construed to limit or restrict the right of Lessor to declare the said term ended and enforce all of their rights and remedies hereunder for any other default not so cured.

The foregoing provision for the termination of this lease for any default in any of its covenants shall not operate to exclude or suspend any other remedy of the Lessor for breach of any of said covenants, or for the recovery of said rent for the full term, and in the event of the termination or default in any of the terms of this lease as aforesaid.

10. Lessee shall permit Lessor and his agents to enter the Property at all reasonable times for any of the following purposes to inspect the same: (i) to maintain the building in which the said premises are located, (ii) to make repairs to the Property as the Lessor is obligated or may elect to make, and (iii) to post notices of non-responsibility for alterations or additions or repairs.

11. If Property, including improvements thereon, are injured by fire or other casualty, Lessee shall have the exclusive right and option to either terminate this Agreement or reconstruct and/or repair the said damaged improvements and continue this Lease under its terms and conditions as if no such casualty occurred by giving written notice to Lessor of Lessee's intention to so continue this Lease within thirty (30) days after the date of said damage or casualty. In the event that Lessee so elects to continue this Lease, any insurance proceeds payable as a result of said fire or casualty shall be first applied to pay the reconstruction or repair of said improvements, and any balance of such insurance proceeds after payment of said reconstruction or repair shall be paid to whoever owns the insurance policy under which payment is made.

12. If, during the term of this Agreement, the Property shall be taken or condemned, either in whole or part, by competent authorities for public or quasi-public use, Lessee shall have the option to terminate this Agreement as of the date of taking. If Lessee elects not to terminate this Agreement, then this Agreement shall continue in full force and effect.

13. It is understood and agreed that the relationship of the parties hereto is strictly that of Lessor and Lessee and that the Lessor has no ownership in the Lessee's enterprise and the Agreement shall not be construed as a joint venture or partnership. The Lessee is not and shall not be deemed to be an agent or representative of the Lessor.

14. All covenants, conditions and agreements and undertakings contained in this Agreement shall extend to and be binding on the respective heirs, successors and assigns of the respective parties hereto the same as if they were in every case named and expressed.

15. It is further understood and agreed by and between the Lessor and Lessee that, on account of breach or default by either party of any of their obligations hereunder, it shall become necessary for the other party to employ and/or consult with an attorney to give advice, or to enforce or demand any of either party's rights or remedies hereunder, then, and in any such event, the defaulting or breaching party shall pay all attorney fees, court costs and other expenses occasioned by such default(s) or breach(es).

16. Written notice to Lessee, all rent checks and all notices from Lessee to Lessor shall be served or sent to:

Until further written notice to Lessor, all notices from Lessor to Lessee shall be served or sent to Lessee at the following address:

All notices to be given under this Agreement shall be in writing and shall be served personally or sent by United States certified or registered mail.

17. This Agreement contains all of the agreements and conditions made between the parties hereto and may not be modified orally or in any other manner other than by agreement in writing signed by all parties hereto or their respective successors in interest.

18. If any section, paragraph, sentence or portion of this Agreement or the application thereof to any party or circumstance shall, to any extent, be or become invalid or illegal, such provision is and shall be null and void, but, to the extent that said null and void provisions do not materially change the overall agreement and intent of this entire agreement, the remainder of this Agreement shall not be affected thereby and each remaining provision of this Agreement shall be valid and enforceable to the fullest extent provided by law.

19. This Agreement shall be governed in accordance with the laws of the State of

Optional Provisions:

20. Lessee shall have the right to make such alterations and improvements to the Property as it deems necessary or desirable upon giving written notice of same to Lessor. Such alterations and improvements shall comply with all applicable construction laws and regulations and shall conform generally with the existing improvements on the Property. The Lessee shall keep the Property free from any and all liens arising out of the work performed or materials furnished in making such improvements.

21. Additional Provisions:

***

WITNESS the signatures of the parties, this the day of , .

LESSOR:

By:

Title:

LESSEE:

By:

Title:

Enter text

What a Commercial Lease Agreement Covers

A Commercial Lease Agreement is a legally binding contract that sets the terms under which a landlord leases commercial real estate to a tenant. It defines the leased premises, rent and payment schedule, security deposit, permitted use, maintenance obligations, term and renewal mechanics, default remedies, insurance and indemnity obligations, and allocation of operating expenses. The agreement governs landlord and tenant rights for the full term and often includes exhibits such as property plans, tenant improvement allowances, and an insurance schedule to document expectations and reduce disputes.

Why a Clear Commercial Lease Agreement Matters

A clear, well-drafted commercial lease allocates risk, prevents misunderstandings, and creates enforceable remedies for both parties. Precise terms reduce negotiation time, lower litigation risk, and clarify financial obligations for accounting and tax purposes.

Why a Clear Commercial Lease Agreement Matters

Typical parties and stakeholders involved

Parties who commonly prepare, review, or sign commercial leases include landlords, tenants, property managers, brokers, outside counsel, and lenders.

  • Landlords and property management teams responsible for rent collection, maintenance, and compliance with zoning and building codes.
  • Commercial tenants and their finance or legal teams who evaluate rent, term, use restrictions, and improvement obligations.
  • Brokers and leasing agents who negotiate terms, prepare standard forms, and coordinate signatures.

Each stakeholder should confirm authority to sign and verify exhibits and insurance requirements before final execution.

Signatories and reviewers

Corporate Signatory

An authorized officer or agent of a corporation signs on behalf of the entity. Confirm board resolutions or written authorization showing the signer has authority to bind the company and include the signer’s printed name and title in the signature block.

Individual Tenant

A sole proprietor or individual tenant signs in their personal capacity. If signing for a business entity, provide business name, tax ID, and corporate designation rather than a personal signature alone.

Core provisions every professional lease should include

A commercial lease should be comprehensive yet specific. The following provisions are commonly negotiated and frequently disputed; each should be tailored to the property type and business needs.

Premises Description

Define rentable area, address, common areas, and exclusive use areas. Attach floor plans or suite measurements to avoid ambiguity about square footage and access points.

Term and Renewals

State the lease start and end dates, options to renew, notice windows for exercising renewals, and any rent adjustment mechanism for renewal terms.

Rent and Charges

Specify base rent, payment schedule, late fees, security deposit, and how operating expenses, taxes, and insurance pass-throughs are calculated and billed.

Use and Exclusivity

Describe permitted tenant uses, prohibited activities, and any exclusivity or co-tenancy clauses that affect tenant operations or landlord obligations.

Maintenance and Repairs

Allocate responsibilities for maintenance, repairs, and capital improvements; clarify common area maintenance (CAM) rules and tenant fit-out obligations.

Default and Remedies

Define events of default, cure periods, landlord remedies (re-entry, rent acceleration), and tenant rights. Include arbitration or venue clauses if desired.

Step-by-step: completing and executing the lease

Follow a standard sequence to reduce errors and ensure enforceability from negotiation to final execution.

  • 01
    Negotiate Terms: Agree material terms in writing before drafting the final lease.
  • 02
    Prepare Draft: Populate exhibits, measurements, insurance, and CAM schedules.
  • 03
    Review Legal: Have counsel review changes and confirm signatory authority.
  • 04
    Execute and Retain: Sign, notarize if required, distribute fully executed copies, and store securely.

Typical signing and routing workflow

A clear routing plan reduces signer friction and creates an audit trail for later enforcement or audit.

  • Document Preparation: Upload lease, attach exhibits, and place required signature and initial fields.
  • Add Signers: Assign signing order for landlord, tenant, guarantor, and witnesses.
  • Authenticate Signers: Use email, SMS code, or stronger authentication when required by policy or law.
  • Complete Signing: Capture signatures, timestamps, and deliver final executed copies to all parties.

Digital workflow settings to consider

Configure the signing environment to match your compliance and operational needs before sending for signature.

Field Configuration
Authentication Email link, SMS OTP, or KBA where higher assurance is needed
Signing Order Sequential for approvals or parallel for simultaneous signing
Reminders Automatic reminders at customizable intervals
Audit Trail Enable full action logging with timestamps and IP addresses

Platform and file format considerations for e-signing

Ensure your eSignature platform supports required file formats and integrations used in leasing operations.

  • Document Formats: PDF and Word DOCX are standard; ensure support for large exhibits and image-quality retention
  • Integrations: Connectors for document management and accounting systems reduce manual entry
  • Security: Ensure TLS and AES encryption, plus audit trails and role-based access control

Confirm the vendor supports your required legal standards and provides verifiable audit logs and exportable signed documents for recordkeeping.

Key dates commonly tracked in a commercial lease

Track critical deadlines both before and after execution; missed dates can trigger penalties or loss of options.

Effective and Commencement Dates:

Start of lease obligations and rent commencement dates

Rent Due Dates:

Monthly or periodic due dates and grace period terms

Renewal Notice:

Deadlines for exercising renewal options (commonly 60–180 days)

Termination Notice:

Notice windows for early termination or holdover remedies

Surrender and Move-Out:

Final inspection dates and restoration deadlines at lease end

Milestones from negotiation to occupancy

A sequenced checklist helps coordinate legal, construction, and operational tasks ahead of tenant move-in.

01

LOI and Term Sheet

Negotiate key commercial terms and agree on major deal points

02

Draft Lease

Prepare lease with exhibits and tenant improvement allowances

03

Approvals and Permits

Obtain permits, lender consents, or landlord approvals for improvements

04

Final Execution

Sign, notarize if required, and deliver executed lease and keys

Common drafting and execution pitfalls

  • Ambiguous Premises Description—leads to disputes over area, access, and CAM allocations.
  • Unclear CAM Calculation—failing to define base year or chargeable items creates recurring disputes.
  • Insufficient Authority—signer lacks corporate authorization, risking unenforceability.
  • Missing Exhibits—omitting floor plans, service contracts, or insurance schedules causes operational confusion.

Legal and financial risks of a defective lease

Breach Liability: Tenant or landlord may face damages, rent acceleration, or specific performance remedies
Eviction Costs: Improper notice or procedural errors can delay eviction and increase legal fees
Tax Consequences: Misstated lease terms may affect taxable income reporting and depreciation treatment
Insurance Gaps: Incorrect insurance clauses can leave parties exposed to uncovered claims
Lien Risk: Contractor liens may attach if improvement obligations and lien waivers are not properly handled
Enforceability: Defective execution or missing authority can render the lease voidable or unenforceable

Typical eSignature vendor pricing and feature snapshot

Common capability and pricing dimensions for eSignature services. signNow appears first for comparison; features and starting prices vary by plan and billing frequency.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No

Real-world scenarios for Commercial Lease Agreement use

Examples illustrate practical applications and common modifications in leases across different business situations.

Retail Tenant Expansion

A retailer negotiated a tenant improvement allowance to fund build-out

  • Landlord required lien waivers and phased payments
  • The executed lease included detailed exhibit schedules and payment milestones to protect both parties, reducing disputes during construction and occupancy.

Medical Office Fit-Out

A medical practice required HVAC and waste-handling clauses for clinical use

  • Landlord agreed to specific MEP upgrades as a condition of lease execution
  • The lease attached technical specifications and an acceptance protocol, ensuring regulatory compliance and clear responsibility for future maintenance.

Practical tips to improve accuracy and speed

Adopt standardized processes and checklists to shorten negotiation cycles and reduce execution errors.

Use Standardized Templates
Keep a vetted base lease template and limit edits to negotiated clauses to reduce drafting time and legal spend.
Confirm Signatory Authority
Obtain corporate resolutions, powers of attorney, or signature memoranda before execution to ensure enforceability.
Attach All Exhibits
Number and reference exhibits in the lease body to avoid omissions and interpretive disputes later.
Maintain Audit Trails
Use an eSignature platform that captures timestamps, IP addresses, and signer authentication records for future enforcement or audits.

Frequently asked questions about executing commercial leases

Answers to common practical and legal questions encountered when preparing and signing commercial lease agreements.


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