California commercial lease agreement differs from the residential lease agreements, do you want to know the details? This kind of agreement has specific considerations from the State of California. Moreover, there are some important disclosures to include.
If you are interested in knowing about the details of the California commercial lease agreement, then keep reading.
What Is a California Commercial Lease Agreement?
The California commercial lease agreement is a legal document that the parties use for renting out commercial spaces to businesses. This document consists of all the necessary terms and conditions that the concerned parties sign-on.
Parties can use the California commercial lease agreement for renting an industrial space, a retail store, or office space. Whatever property is, it is binding for the parties to follow the state regulations and the terms they agree on.
Besides, the California commercial lease agreement comes in three different types, each having its own effects on the parties. Some of these agreements are tenant-friendly while some prove to be landlord-friendly. Hence, these three types include the Gross Lease, the Triple Net Lease, and the Modified Gross Lease.
A California commercial-lease agreement generally has a greater validity-period that allows the businesses to set their foot in the market. Moreover, it can leave a significant impact on the tenant and the landlord’s financial condition.
Required Disclosures for a Commercial Lease Agreement in California
The state of California makes some of the disclosures necessary for the landlord to include in a commercial lease agreement. These include:
- Asbestos Disclosure: If the property to rent had been constructed before 1979, the landlord must disclose the presence of asbestos. Moreover, the landlord must state the procedure to tackle the presence of asbestos preventing the hazards.
- Disability Access Inspection Disclosure for Commercial Properties: It is compulsory for the landlord to disclose if the property ever underwent the accessibility inspection. A Certified Access Specialist (CASp) investigates the property for its accessibility to disabled persons.
- Material Facts Disclosure: If the commercial property suffers from any hazardous condition, the landlord must disclose about them in the agreement. Otherwise, the law considers it a fraud on behalf of the landlord.
- Proposition 65 Warning Notice: If the rental property has a risk of exposure to dangerous chemicals in its environment, the landlord must state so. This can be in the drinking water, whatever it is, the landlord must make the tenant aware of it clearly. Under the California health and safety code, this disclosure must appear on the agreement in the form of a warning.
- Smoke Alarm Compliance: Generally, this disclosure is a mandatory requirement of residential properties. However, for safety purposes, it is better for the landlord to state about it for commercial property too.
- Arbitration of Disputes: A disclosure stating the agreement of the tenant to solve any dispute without court proceedings is important to include. This helps to control situations in the future in case any dispute occurs.
What Are Included in a California Commercial Lease Agreement?
To maintain the balance of rights of landlord and tenant, the California state declares some things that are important to include. These sections are mandatory to form part of the California commercial lease agreement. Therefore, these include:
- Introduction of the lease and its validity period. This also includes the legal names of the landlord and the tenant.
- An accurate description of the commercial property. This must include type, the area covered, and registered address of the property.
- Allowance of the use of the property.
- The payable rent due each month.
- Renewal options and details.
- Security deposit amount, where will the landlord keep it, and terms to return the security deposit.
- All the necessary licenses and the permits the tenant has to run the business.
- Responsibilities of the tenant and the landlord. Terms regarding maintenance and cleanliness are mandatory to include.
- Requirements regarding insurance issues.
- Requirements regarding sublease of the property.
- Terms regarding damage to the property. The landlords must also address the damage that occurs naturally.
- Terms for non-payment of rent by the tenant.
- Statement for bankruptcy.
- Estoppel certificate.
- Notice requirements. It must also include the terms regarding the notices.
- Indemnification statement.
- Amendment statement.
- Finally, the signatures of the parties involved.
California-Specific Considerations for Commercial Lease Agreement
Like the residential agreements, the California state has some specific considerations for the commercial lease agreement too. These include:
- Subletting: The California law makes it compulsory for the tenant to seek permission from the landlord before subleasing the property. Otherwise, a landlord may go to legal proceedings against the tenant for subletting the property. This can also result in the eviction of the tenant.
Therefore, the application for subletting the rental property must include:
- The term of the sublease, start date and the end date.
- The name and contact information of the person who rents the property on the sublease.
- The current address of the sub-lessee.
- The address to which the primary tenant moves after subletting the property.
- The signatures of all the involved parties.
- It is a must to attach a copy of the sub-lease agreement.
Moreover, under California law, the landlord cannot deny subleasing unless they have a solid reason for it. If they have a reason well enough, the landlord must provide a properly written document stating the reason.
- Key Money: The state law of California strictly prohibits the landlord to receive any key money for signing the agreement. Therefore, if any landlord demands such money, the tenant can legally demand three times the damages they face for not signing the lease.
- Rent Control and Commercial Property: The State of California doesn’t impose any limit on the rent that the landlord may demand commercial property. This is because it may give undue advantage to certain businesses.
- Evictions: The California law has the same regulations regarding eviction from the commercial property as those of the residential property. However, the reason to file for eviction includes rent non-payment or the tenant violating the lease terms.
The California commercial lease agreement must follow the regulations of the state. Additionally, the landlord has to provide all the disclosures that the state demands. At the same time, the landlord must include all the necessary terms in the lease agreement, and the tenant must provide the information responsibly.
Moreover, a California commercial lease agreement template is available on the CocoSign website. You can check out our website for other agreements as well.
CocoSign represents a wide collection of legal templates covering all types of leases, contracts and agreements for personal and commercial use. All legal templates available on CocoSign shall not be considered as attorney-client advice. Meanwhile, CocoSign shall not be responsible for the examination or evaluation of reviews, recommendations, services, etc. posted by parties other than CocoSign itself on its platform.