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Key Terms to Know in a Commercial Lease Agreement

Commercial lease agreements can be complex and involve many different terms and provisions. Below are some key terms to know in a commercial lease agreement along with their definitions:

  1. Rent: The amount of money the tenant pays to the landlord for use of the property.
  2. Term: The length of time the lease will be in effect. It could be a fixed term, such as one year, or it could be a month-to-month arrangement.
  3. Option to Renew: A clause in the lease that gives the tenant the right to renew the lease for an additional term, usually at a predetermined rent.
  4. Security Deposit: A payment made by the tenant to the landlord to cover any damages or unpaid rent at the end of the lease.
  5. Common Area Maintenance (CAM) Charges: Fees paid by tenants to cover the cost of maintaining shared areas such as lobbies, elevators, and parking lots.
  6. Use Clause: A section of the lease that defines the allowable uses of the leased space by the tenant.
  7. Subletting: The act of a tenant leasing all or a portion of their leased space to another party.
  8. Assignment: The transfer of a tenant’s rights and responsibilities under a lease to another party.
  9. Termination: The end of the lease term, or the cancellation of the lease before the end of the term.
  10. Default: The failure of the tenant to meet their obligations under the lease, which could result in eviction or other penalties.
  11. Guarantor: A third party who guarantees payment of rent and other obligations under the lease if the tenant is unable to do so.
  12. Build-out: The construction or renovation of the leased space to meet the tenant’s specific needs.

These are just a few key terms that are commonly found in commercial lease agreements. It is important to review and understand all the terms and provisions of a commercial lease agreement before signing it.

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