Commercial leases are complex agreements that address property rights and obligations of both landlords and tenants over a period of years. Parties on both sides of the agreement rely on the terms of a well-drafted commercial lease to address unanticipated circumstances and establish mechanisms to manage conflicts as they arise.
The New Jersey law firm of GLR&W, LLC negotiates and drafts commercial leases that serve the interests of commercial landlords and their tenants. We believe that a well-crafted commercial lease is critical to achieving the greatest value and the strongest returns from commercial properties.
Commercial Leases are Different that Residential Leases
Both commercial and residential leases define the duration of the tenant’s rights to the property and the tenant’s rent obligations. In the Garden State, New Jersey leasing lawyers also include provisions in commercial leases to address matters, including:
- Rent escalation clauses that increase rent payments when leases are for a period of years.
- Tenant improvement allowances if the leased space will be improved for the tenant’s business.
- Details of the tenant’s obligations to pay for insurance and a ratable portion of real estate taxes, utilities, and maintenance of common areas.
- Sub-leasing provisions and limitations
- Obligations to continue business operations
- Management and administration of security deposits
- Mechanisms to handle disputes
- Penalty and default provisions if a tenant is unable to continue the lease.
New Jersey Landlords Use Different Types of Commercial Leases
Depending on the nature of the tenant’s business and the characteristics of the commercial space, a commercial landlord might offer one of three basic commercial leasing agreements:
- A gross or full-service lease, under which the tenant’s gross rent payment obligation includes base rent plus a ratable portion of all property operating expenses, including real estate taxes, utilities, maintenance, and other building fees.
- A net lease, under which the tenant pays a lower base rent plus separate fixed operating expenses (net leases are further sub-categorized as single, double, triple, or absolute net triple leases)
- A modified gross or net lease, which features a fixed base lease rent rate and a negotiated middle ground for payment of operating expenses
Experienced commercial lease attorneys can help determine which type of commercial lease best suits their needs.
Commercial Leases are Difficult to Break in New Jersey
A commercial tenant that seeks to walk away from commercial lease obligations will continue to owe rent, at least until the landlord finds a suitable replacement tenant for the commercial space, in which case the former tenant might still be liable for additional losses. Parties to a commercial lease often include provisions in the commercial lease contract that consider possible alternative leasing scenarios, including:
- Surrender or early termination clauses, where a tenant pays a fee to end the commercial lease prematurely and to return the property to the landlord
- Lease assignments, under which a new tenant takes over the lease, usually subject to the commercial landlord’s approval
- Sublease provisions, under which the tenant subleases a portion or all the space to a new tenant, again with the landlord’s approval
- Licensing clauses that give a new tenant contractual rights but not property rights to the leased commercial space.
Contact GLR&W To Discuss Your Commercial Lease
Without a leasing attorney in your corner, commercial landlords and tenants run the risk of overlooking critical terms and conditions in your lease. Make sure you protect your rights by working with a trusted attorney who can negotiating terms, drafting, and reviewing your lease document before you become contractually bound.
Before you execute any commercial lease documents, contact GLR&W, LLC in Mount Holly to schedule a consultation. Our leasing attorneys are standing by to serve.