Key terms should be specifically defined in the commercial lease. It takes experience and judgment to figure out what terms need to be defined. Below are some of the terms we define in almost any commercial lease along with model definitions. Keep in mind, this is not an exhaustive list. We often add more.
- Additional Rent
- All sums, including fees and charges, payable by Tenant to Landlord under this Lease, other than Monthly Base Rent.
- That certain building, currently used as a _____________, located on the Premises.
Any act or omission that does or would, with the passage of time or otherwise, result in an Event of Default.
- Default Interest Rate
The lesser of (a) _____________ percent (______%) per annum, or (b) the maximum interest rate allowable under the Rules of Governing Entities.
- Effective Date
The date set forth in the introductory paragraph of this Lease.
Any mortgage, deed of trust, pledge, charge, hypothecation, security interest, attachment, encumbrance (including easements and rights of way), or other voluntary or involuntary lien or charge. The term “Encumbrances” includes materialman’s liens, mechanic’s liens, and similar statutory liens associated with the provision of goods or services.
- Environmental Laws
All applicable federal, state, and local environmental, health, or safety statutes, laws, regulations, rules, and ordinances (whether now existing or hereafter enacted or promulgated), and all applicable judicial, administrative, and regulatory decrees, judgments, and orders, including common law rulings and determinations, relating to injury to, or the protection of, human health or the environmental—including all requirements pertaining to reporting, licensing, permitting, investigation, remediation, and removal of emissions, discharges, releases, or threatened releases of Hazardous Substances into the environment, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Substances.
- Expiration Date
- The date that is ______ year after the Effective Date.
- Event of Default
- Any of the events described in Section ______ of this Lease.
- Governing Entities
- Any government, authority, department, commission, court, arbitrator, board, bureau, agency, unit, or instrumentality having jurisdiction over the Premises. The term “Governing Entities” includes the United States of America; the State of _____________; the County of _____________, _____________; and the City of _____________, _____________.
- Hazardous Substances
- Any substance (a) the presence of which requires notification, removal, or remediation under any Environmental Law; (b) that is or becomes classified as a “hazardous waste,” “hazardous material,” “hazardous substance,” or similar designation under any present or future Environmental Law, or amendments thereto—including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601, et seq.) and any applicable local statutes and the regulations promulgated thereunder; (c) that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, or otherwise hazardous and that is or becomes regulated pursuant to any Environmental Law; or (d) without limitation, that contains gasoline, diesel fuel, or other petroleum products, asbestos, or polychlorinated biphenyls.
- Insurance Premiums
- All insurance premiums for policies applicable to the Building and/or the Premises. The term “Insurance Premiums” includes insurance premiums for full replacement value multi-peril extended coverage, liability, and loss of rents insurance as Landlord deems to be necessary or appropriate, and any other insurance coverage (which may include any direct physical loss or multi-peril endorsement) that Landlord or Landlord’s lender deems necessary or appropriate.
- This Commercial Lease.
- Monthly Base Rent
- The rent described in Section ______ of this Lease.
- Employees, agents, representatives, and invitees of Tenant.
- The Premises shall consist of the real property and building (“Building”) located at _____________, and legally described on the attached Exhibit A.
- Real Property Taxes & Assessments
- All real estate taxes, levies, and current installments of assessments, whether special or general—including any assessments by road improvement districts, water improvement districts, or local improvement districts; utility installation, hook-up, tie-in, or similar charges, and any subsequent increase in any such taxes, levies, or assessments imposed for any reason. The term “Real Property Taxes & Assessments,” shall not include (i) federal or state income tax calculated on Rent, (ii) any one-time transfer tax (as opposed to an increase) which may be levied or assessed against Landlord or (iii) any business and occupation tax assessed against the Landlord; provided however, that should the federal government, State of _____________, County of _____________, the City of _____________ or any other political subdivision impose a gross or net rent tax, or any other similar tax, Tenant shall be responsible for the payment thereof.
- Monthly Base Rent and Additional Rent.
- Rules of Governing Entities
- Any laws, statutes, regulations, rules, ordinances, orders, and other lawful requirements of any Governing Entity. The term “Rules of Governing Entities” includes Environmental Laws, the Americans With Disabilities Act, and rules promulgated by the Occupational Safety & Health Administration. The term “Rules of Governing Entities” also includes any rules or regulations governing the occupancy or use of the Building that may be required by law.
- [Name of the tenant], a [state] [type of entity]
- The term set forth in Section ______ of this Lease.