What should a residential lease agreement include?

A comprehensive residential lease agreement should include: the full legal names of the landlord and all tenants; the property address and description; the lease term (start date, end date, and renewal terms); rent amount, due date, and acceptable payment methods; security deposit amount and conditions for return; late fee structure; maintenance and repair responsibilities; utility payment assignments; rules about pets, smoking, and guests; entry notice requirements; termination and early termination provisions; and all state-required disclosures such as lead-based paint disclosure (required for pre-1978 homes), mold, and registered sex offenders.

How do I legally evict a tenant?

Legal eviction requires strict compliance with your state's procedures: (1) Identify a valid legal reason — non-payment of rent, lease violation, end of lease term, or illegal activity; (2) Serve proper written notice using your state's required form, method of delivery, and waiting period (typically 3-30 days depending on the reason and state); (3) If the tenant does not comply or leave, file an eviction lawsuit (called an "unlawful detainer" in many states) with your local court; (4) Attend the court hearing and obtain a judgment; (5) If the tenant still does not leave, request a writ of possession for the sheriff to remove them. Never attempt a "self-help" eviction (changing locks, removing belongings, shutting off utilities) — this is illegal in every state.

What is a quitclaim deed and when is it used?

A quitclaim deed transfers whatever ownership interest the grantor has in a property to the grantee, without making any guarantees about the title. Unlike a warranty deed, a quitclaim deed does not promise that the title is clear or that the grantor actually owns the property. Common uses include: transferring property between spouses during or after divorce; adding or removing a name from a property title; transferring property to a living trust; gifting property to family members; and clearing up title defects like misspelled names. Quitclaim deeds must be signed, notarized, and recorded with the county recorder's office.

What is the difference between a lease and a rental agreement?

A lease is a fixed-term agreement (typically 12 months) that cannot be changed by either party until the term expires, providing stability for both landlord and tenant. A rental agreement (often called a month-to-month agreement) automatically renews each month and can be terminated or modified by either party with proper notice (usually 30 days). Leases offer predictable income for landlords and stable housing for tenants, while month-to-month agreements provide flexibility but less security. Most residential rentals start with a fixed-term lease that converts to month-to-month after the initial term.

How much can I charge for a security deposit?

Security deposit limits vary significantly by state. Many states cap deposits at one to two months' rent — for example, California limits deposits to two months' rent for unfurnished units, while New York recently capped deposits at one month's rent. Some states like Ohio and Mississippi have no statutory limit. States also regulate how quickly you must return the deposit after move-out (typically 14-30 days), what deductions are allowed, and whether you must hold the deposit in a separate account or pay interest. Our state-specific lease templates automatically include the correct security deposit provisions for your jurisdiction.

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When Do You Need a Commercial Lease Agreement?

A landlord or property owner is leasing office, retail, warehouse, or industrial space to a business tenant and needs a comprehensive lease covering rent structure, common area maintenance (CAM) charges, permitted use, insurance requirements, and build-out allowances. Commercial leases are governed by contract law rather than the residential landlord-tenant protection statutes that apply to a residential lease template, giving both parties significantly more freedom to negotiate terms.

A small business owner is opening their first physical location, whether a restaurant, retail store, medical practice, or professional office, and needs to understand and negotiate the lease terms before committing to a multi-year obligation. The commercial lease template helps first-time tenants identify critical provisions they might otherwise overlook, such as CAM charge escalations, personal guarantee requirements, and use clause restrictions.

A tenant is expanding operations and needs to lease additional space in the same building or a different property, requiring a new lease or amendment that addresses expansion rights, relocation provisions, and rent adjustments based on the increased square footage. The template includes option-to-expand provisions and co-tenancy clauses for multi-location tenants.

An investor purchasing a commercial property with existing tenants needs to review, assume, or renegotiate commercial leases to ensure the rental income supports the acquisition's financial projections and the lease terms protect the property's long-term value.

A property management company is standardizing lease documentation across a portfolio of commercial properties and needs a template that can be customized for different property types (office, retail, industrial) while maintaining consistent legal protections for the landlord across the entire portfolio.

A business is negotiating a sublease for commercial space and needs to understand the master lease terms that will govern the sublease relationship and any restrictions on subletting. Reviewing a commercial lease template helps subtenants evaluate whether the master lease protections are adequate before committing to the sublease.

What Should a Commercial Lease Agreement Include?

Premises Description and Permitted Use

The lease must precisely describe the leased premises by street address, suite or unit number, floor, and rentable versus usable square footage. Include a floor plan as an exhibit. The permitted use clause restricts the tenant's operations to specified business activities (e.g., "general office use," "retail sale of clothing and accessories," or "medical/dental practice"). Landlords use this provision to maintain the tenant mix in a multi-tenant property and prevent uses that could increase insurance costs or violate zoning ordinances. Tenants should negotiate for the broadest reasonable use clause to preserve flexibility.

Rent Structure and Escalation

Commercial leases use various rent structures: gross lease (landlord pays operating expenses), net lease (tenant pays base rent plus some or all operating expenses), and percentage lease (base rent plus a percentage of tenant's gross sales). The lease must specify the base annual rent, monthly installment amount, due date, and escalation schedule. Typical escalation methods include fixed annual increases (e.g., 3% per year), CPI adjustments, or market rate resets at specified intervals. For net leases, clearly define which operating expenses pass through to the tenant and establish a cap or audit right on controllable expenses.

Common Area Maintenance (CAM) Charges

CAM charges represent the tenant's proportionate share of the costs to operate and maintain common areas such as lobbies, hallways, restrooms, parking lots, and landscaping. The lease should define which expenses qualify, how the tenant's proportionate share is calculated (typically based on the ratio of tenant's rentable square footage to total building square footage), whether the landlord charges an administrative fee, and the tenant's right to audit CAM calculations. Tenants should negotiate caps on annual CAM increases and exclusions for capital expenditures and costs attributable to other tenants' defaults.

Lease Term, Renewal Options, and Early Termination

Commercial leases typically run three to ten years or longer, depending on property type and tenant improvement investment. The lease should specify the commencement date (which may be tied to completion of tenant improvements), the expiration date, and any renewal option terms, including the notice period for exercising the option (typically 6 to 12 months before expiration) and the method for determining renewal rent. An early termination clause allows exit under specified conditions, usually subject to a termination fee equivalent to several months' rent plus unamortized costs.

Tenant Improvements and Build-Out

This section addresses the initial improvements needed to prepare the space for the tenant's intended use. It should specify the landlord's tenant improvement allowance (TI allowance, expressed as dollars per square foot), the scope of the landlord's base building work, the tenant's responsibility for improvements beyond the TI allowance, the approval process for improvement plans, and the ownership of improvements upon lease expiration. For significant build-outs, attach a detailed work letter as an exhibit describing construction responsibilities, timelines, and cost allocation.

Insurance and Indemnification

The lease should require the tenant to maintain commercial general liability insurance (typically $1 to $2 million per occurrence), property insurance covering the tenant's personal property and improvements, workers' compensation insurance, and business interruption insurance. The landlord should be named as an additional insured on the tenant's liability policy. A mutual waiver of subrogation prevents each party's insurance carrier from pursuing claims against the other for covered losses.

Assignment and Subletting

This clause governs whether the tenant may assign the lease or sublet all or a portion of the premises. Most commercial leases require the landlord's prior written consent, which may not be unreasonably withheld. The landlord may retain the right to recapture the space or to share in any profit the tenant realizes from the sublease. Tenants should negotiate for permitted transfers to affiliates, subsidiaries, and successors without landlord consent.

Default, Remedies, and Surrender

Define the events of default for both parties. Tenant defaults typically include failure to pay rent (with a short grace period of 5 to 10 days), breach of use restrictions, abandonment, and bankruptcy. Landlord remedies include the right to terminate the lease, re-enter and relet the premises, accelerate remaining rent, and recover damages. The lease should also address the tenant's obligations upon surrender, including removal of trade fixtures and restoration of the premises. If disputes arise over the premises condition, a formal eviction notice may be necessary.

Signature Requirements

E-Signature Valid

Commercial leases are valid with electronic signatures under ESIGN/UETA.

Related Real Estate Templates

A commercial lease agreement is often used alongside other real estate documents. Depending on your situation, you may also need:

Residential Lease Agreement Template

Real Estate

Free Eviction Notice Form

Real Estate

Download Sublease Agreement

Real Estate

Quitclaim Deed Template

Real Estate

Generate a custom commercial lease agreement with AI instead

How to Fill Out a Commercial Lease Agreement

Identify the Parties and Premises

Enter the landlord's legal entity name and address, and the tenant's legal entity name, state of formation, and principal business address. Describe the premises in detail: include the street address, suite number, floor level, and both rentable and usable square footage. Attach a floor plan showing the exact boundaries of the leased space, including any exclusive or shared areas.

Establish the Lease Term and Key Dates

Enter the lease commencement date, which may be a specific calendar date or tied to a contingency such as substantial completion of tenant improvements or issuance of a certificate of occupancy. Specify the lease expiration date and any rent-free fixturing period at the beginning. If renewal options are included, enter the number of renewal terms, their duration, the notice period for exercise, and the method for determining renewal rent.

Define the Rent Structure and Expense Pass-Throughs

Select the appropriate rent structure (gross, modified gross, single net, double net, triple net, or percentage). Enter the base annual rent, monthly installment, and annual escalation terms. For net leases, specify the tenant's proportionate share percentage and list all expense categories that pass through. For percentage leases, define the breakpoint above which the percentage rent applies and any exclusions from gross sales calculations.

Document Tenant Improvement Terms

Enter the TI allowance amount, the deadline for submitting improvement plans, the landlord's approval timeline, and the process for handling change orders. Specify whether unused TI allowance can be applied to rent credit, whether the tenant may use its own contractors (subject to landlord approval), and who owns the improvements at lease expiration. Attach the work letter as an exhibit.

Complete Insurance and Security Deposit Provisions

Enter the required insurance coverage amounts (commercial general liability, property, workers' comp), the deadline for delivering certificates of insurance, and the security deposit amount. Commercial security deposits are commonly equal to one to three months' base rent. Specify the conditions for return of the security deposit and whether the landlord may apply it to past-due rent or repair costs.

Execute and Record the Lease

Both parties should have the completed lease reviewed by their respective attorneys and commercial real estate advisors before signing. After execution, some jurisdictions require or recommend recording a memorandum of lease in the county land records to provide constructive notice of the tenant's leasehold interest, particularly for long-term leases. Each party retains a fully executed original with all exhibits, floor plans, and work letters attached.

Free Template vs Custom Commercial Lease Agreement

Feature	Free Template	Custom (AI or Attorney)
Basic lease terms (rent, term, premises)
Permitted use and exclusivity clausePaid includes radius restriction provisions
CAM charge reconciliation and audit rightsCritical for controlling occupancy costs	-
Tenant improvement allowance provisionsIncludes detailed work letter exhibit	-
Assignment and subletting provisionsIncludes profit-sharing and recapture rights	-
Insurance and mutual indemnificationPaid includes waiver of subrogation
Renewal and expansion optionsEssential for growing businesses	-
State-specific commercial lease complianceRequirements vary by jurisdiction	-

Commercial Lease Agreement Template FAQ

What is the difference between a commercial lease and a residential lease?

A commercial lease governs the rental of property used for business purposes (offices, retail stores, warehouses, restaurants), while a residential lease governs property where a tenant lives. The most significant legal difference is consumer protection: residential tenants benefit from state landlord-tenant protection statutes that limit security deposits, mandate habitability standards, require specific eviction procedures, and restrict lease termination. Commercial tenants have far fewer statutory protections, meaning the lease itself is the primary source of rights and obligations. Commercial leases are also substantially longer (typically 3 to 10 years versus 1 year for residential), involve higher financial commitments, and include complex provisions for CAM charges, tenant improvements, and personal guarantees that do not exist in residential agreements.

What is a personal guarantee in a commercial lease?

A personal guarantee is a provision where an individual, typically the business owner or principal, agrees to be personally liable for the lease obligations if the business entity defaults. This means the landlord can pursue the guarantor's personal assets, including bank accounts, real estate, and other property, to recover unpaid rent, damages, or remaining lease payments. Landlords commonly require personal guarantees from small businesses, startups, and newly formed LLCs that lack established credit histories or significant business assets. Tenants should negotiate limitations on the personal guarantee, such as a "good-guy guarantee" that limits liability to rent owed through the date the tenant vacates and surrenders the premises, or a "burn-off" provision that eliminates the guarantee after a specified period of timely rent payments.

How is rent calculated in a commercial lease?

Commercial rent is typically quoted as an annual price per square foot, then divided into monthly payments. For example, $30 per square foot for a 2,000-square-foot space equals $60,000 annually or $5,000 per month in base rent. The total occupancy cost depends on the lease structure: in a gross lease, the quoted rent includes most operating expenses; in a triple net (NNN) lease, the tenant pays base rent plus property taxes, insurance, and common area maintenance (CAM) charges as separate line items, which can add $8 to $15 per square foot. Most commercial leases include annual rent escalation clauses tied to a fixed percentage (typically 2% to 4%), the Consumer Price Index (CPI), or fair market value adjustments at specified intervals. Use the commercial lease generator to calculate your total occupancy cost under different rent structures.

What happens when a commercial lease expires?

When a commercial lease expires, the outcome depends on the lease terms and the parties' actions. If the lease includes an automatic renewal clause, it renews for the specified period unless one party provides written notice of non-renewal within the required timeframe (typically 90 to 180 days before expiration). If no renewal provision exists and the tenant remains in possession without a new agreement, most jurisdictions convert the arrangement to a holdover tenancy, which may be month-to-month at the existing rent or at a significantly increased holdover rate (often 150% to 200% of the previous rent). Tenants should negotiate renewal options with predetermined rent terms well before the lease expires to avoid holdover penalties. Landlords should include holdover provisions that create a financial incentive for tenants to vacate on time or negotiate a renewal in advance.

Can a commercial lease be terminated early?

Early termination of a commercial lease is possible but carries significant financial consequences unless the lease includes specific exit provisions. Most commercial leases do not include a termination for convenience right for either party, meaning the tenant is obligated to pay rent for the entire lease term even if the business closes. Common strategies for exiting early include negotiating a lease buyout (paying the landlord a lump sum to release you from the remaining obligation), subletting the space to another business with the landlord's consent, or assigning the lease to a new tenant who assumes all remaining obligations. Some leases include an early termination clause that allows the tenant to exit by paying a termination fee, but this must be negotiated before signing.

What insurance is required for a commercial lease?

Most commercial leases require the tenant to carry several types of insurance: commercial general liability (CGL) insurance with minimum coverage of $1 million per occurrence and $2 million aggregate, protecting against claims for bodily injury and property damage occurring on the premises; property insurance covering the tenant's personal property, inventory, and trade fixtures; and workers' compensation insurance if the tenant has employees. Many landlords also require business interruption insurance. The lease typically requires the tenant to name the landlord as an additional insured on the CGL policy, provide certificates of insurance before occupancy, and maintain coverage throughout the lease term. The landlord carries building insurance covering the structure itself, and the cost is often passed through to tenants as part of CAM or NNN charges.

What are tenant improvements (TI) in a commercial lease?

Tenant improvements, often called TI or a build-out, are modifications made to the leased space to suit the tenant's specific business needs, such as constructing offices, installing special flooring, adding plumbing for a restaurant, or building out a medical exam room. The TI allowance is the dollar amount per square foot that the landlord contributes toward these improvements, typically ranging from $10 to $75 per square foot depending on the market, property type, lease term, and tenant's creditworthiness. Longer lease terms generally command higher TI allowances because the landlord amortizes the cost over more years of rent. The lease should specify who manages construction, the approval process for plans, whether unused TI dollars can be applied to rent, and who owns the improvements at lease expiration.

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