The Texas commercial lease agreement holds importance for people who want to rent out a commercial property, as well as people who are in the need of a commercial property for their business.
However, what is the certain things that must include in such an agreement? Keep reading to know the details of the Texas commercial lease agreement.
What Is a Texas Commercial Lease Agreement?
The Texas commercial lease agreement is a legal contract signed between a landlord and a tenant for renting a commercial property. The commercial property in concern may include an office, an industrial property, or a retail-related building.
A Texas commercial lease agreement consists of all the terms and conditions that the parties mutually agreed upon. The important ones among these terms are the property location, rent decided, security deposit, and utility usage. Moreover, the lease agreement states terms regarding the maintenance and renovation of the commercial building and many more.
The Texas commercial lease agreement must be designed carefully. This is because it may have devastating financial consequences on the landlord or the tenant involved. It is better to have the attorney review it before finalizing it.
In fact, the Texas commercial lease agreement is different from the Texas residential lease agreement. The commercial lease agreement proves to be more complicated than residential agreements.
To finalize the terms of the agreement, the tenant, the landlord, and their respective attorneys take the path of negotiations. However, upon completion of the negotiations, the agreement is finalized in a document form that the involved parties sign-on.
The Texas commercial lease agreement is a long term contract. Generally, the duration of a Texas commercial lease agreement’s validity ranges from 3 years to 5 years. This provides the tenant with an opportunity to grow and flourish in their business. Moreover, long term contracts serve to ensure the commitment of the tenant.
However, if the tenant has a new business, the landlord may demand the tenant to provide a personal guarantee.
Who Needs a Texas Commercial Lease Agreement?
A Texas commercial lease agreement is a binding document that settles terms for renting a commercial property. Persons who can need this document include:
- Any commercial property owner
- A commercial property manager
- An individual looking for a commercial building
- A business entity wanting to acquire an office
- An industrial setup looking for establishing themselves
Basically, anyone who wants to rent out a commercial property or get commercial property in Texas needs this document.
In addition to this, people who want to hook up on a long term contract prefer commercial lease agreement. For a person who is resistant to rent their commercial property frequently, prefer having one tenant for the long term. Such people need a Texas commercial lease agreement which binds the contract for a minimum of 3 years.
Similarly, this goes for the persons who are new to their business as well. If they want to establish their setup at a location for a longer period of time, they need this agreement.
What You Can Use a Texas Commercial Lease Agreement for?
A Texas commercial lease agreement is used to outline the responsibilities of a landlord/a tenant when renting a commercial property. This document states all of the terms and conditions that the involved parties decide.
It serves to establish a relationship between the property owner and the tenant. However, a Texas commercial lease agreement is used solely for commercial purposes in contrast to residential uses.
Further, people use the Texas commercial lease agreement to settle things for a longer duration. Instead of going through the contract renewal each month, people opt for longer contracts.
What Are Included in a Texas Commercial Lease Agreement?
While writing a Texas commercial lease agreement, there are certain things that are important to include. These include:
Name of the parties:
A Texas commercial lease agreement must include the name and contact information of all involved parties. This section also includes the business details of the respective parties.
Details of the commercial property:
It is important to include the details of the commercial property which is to rent. These details include the address of the property and the specific unit number for multiple tenants. If the commercial property has zoning ordinances that govern it, it should be included in the lease agreement. This helps to restrict the tenant to operate according to the zones.
The Texas commercial lease agreement must state specifically the start date of the agreement and the termination date. This section addresses the other issues related to the termination of the lease.
It includes deciding for terms if the tenant’s business drops before termination of the lease. Likewise, it includes permission for tenants to sublet the commercial property. If the landlord demands specific notice requirements/penalties for terminating the contract earlier than its due date, it should be included.
Further, this section of the lease agreement decides for conditions where the tenant sells out his business to someone else, as well as the landlord’s right to remove a tenant from a commercial property.
Rent and late fee:
The Texas commercial lease agreement includes the due rent clearly. It states the amount of rent due each month, year, or semi-year. Contrary to the residential leases, commercial leases tend to be for a greater period. Therefore, the details of the rent increase are clearly stated in a lease agreement.
It includes the amount to be increased and the duration by which it will increase. Additionally, this section includes any late fee that the landlord may charge for the delayed payment of rent.
The amount of security deposit that a landlord demand is a must to include in the agreement. However, it also provides the time allowance for the landlord to return the deposit once the tenant moves out. The landlord is allowed 60 days to return the deposit amount under the state law of Texas.
Utilities and trash removal:
The lease agreement must include the list of all utilities that the renter will utilize. The lease must clearly state the sharing of utilities, how are utilities going to be shared, and who will pay for them. Similarly, with the trash removal, it should be decided who is responsible to pay for the dumpster truck.
If the landlord does not allow the tenant to use any sort of hazardous material within the commercial premises, the lease must state so.
Improvements and renovations:
Some common questions regarding the renovation and improvement of the commercial property must be answered in the lease. This includes the person responsible to pay for the renovation that suits the tenants’ business.
Similarly, whether the landlord wants the property in original condition or renovated upon termination, should be mentioned. However, if there are certain repairs or maintenance issues with the property, it is the duty of the landlord to get these done.
It is mandatory for the landlords to get insurance for the commercial property. When a tenant moves in, it becomes necessary for them to pay for the insurance amount.
A Texas commercial lease agreement ties the terms between the parties who wish to rent a commercial property. This Texas commercial lease agreement has its own uses and is required by a certain group of people.
If you feel like having a Texas commercial lease agreement template, you can get it from CocoSign. CocoSign has put together a number of templates to pick from its website.
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.