A Texas Commercial Lease Agreement is fundamentally a contract between you and your landlord, establishing a reciprocal commitment. This accord grants you permission to utilize a property for your business endeavors, for a predetermined duration and cost. It's customized to accommodate the particular activities your enterprise plans to conduct on-site. Be certain to comprehend every aspect prior to affixing your signature.
Chapter 93, Article 2A of the Property Code is dedicated to commercial tenancies. This encompasses various methods, definitions, and regulations that govern the inception, alteration, performance, and violation of lease agreements.
As detailed in certain segments of the chapter:
Read on to learn more about Texas Commercial Lease Agreement, including:
Here are some key components that are typically included in a Texas Commercial Lease Agreement:
As an entrepreneur, you may be overwhelmed by the intricate legal terminologies implicated. Nevertheless, armed with a precise plan and apt advice, you can assertively formulate your lease agreement. Let's delve into the fundamental elements of a commercial lease agreement and ascertain how to customize it for your requirements - regard this as your amicable, direct manual to traverse the realm of commercial leases.
The "Approved Uses" provision instructs how the leased property should be utilized. With clarity, it delineates the permitted operations. These activities encompass manufacturing undertakings, administrative tasks, storing, disseminating, and fabrication and delivery of goods.
It's vital to precisely enlist all foreseen business functions here. This transparency can circumvent possible legal complications and assures effective deployment of resources. Document every specification to evade unanticipated situations. This comprehension sustains your business's progress.
Industrial and light manufacturing, warehousing, office, distribution, and assembly, including designing, manufacturing and distributing branded merchandise and promotional products, including all activities incident or ancillary thereto and all other lawful uses and purposes.
(a) This pertains to the lease duration and prolongations. It commences on the "Commencement Date" and terminates on the "Termination Date". You have the option to elongate it for two additional two-year cycles under identical terms, although rental charges may escalate. Give written notice to the landlord 30 days prior to the term ending for an extension.
(b) The word "Tenure" incorporates both your preliminary lease phase and any potential elongations.
Explicit lease tenures are central to business strategizing and operations, as well as possible extensions.
(a) The initial term of this Lease will commence on the Effective Date and expire on the Expiration Date. The Tenant may extend the Term of this Lease for [two] additional [two]-year extension term(s), on all the same terms and conditions (except for Rent, which will increase during extension Terms as provided below) contained in this Lease, by notifying the Landlord in writing of the Tenant’s election to do so not less than 30 days before the expiration date of the then-current Term, as the case may be.
(b) The initial term and any applicable extension term are referred to in this Lease as the “Term.”
The "Fixes and Upkeep" section delineates who is responsible for maintenance. It stipulates both interior and exterior concerns, such as defective pipes or deteriorated stonework. The financial burden rests on the proprietor, not you.
If a fix isn't promptly managed, you have the option to facilitate the repair job and deduct it from your rent. Persistently archive these events for prospective reference. This passage is significant, as it establishes maintenance accountabilities and safeguards you from unanticipated charges.
From and after the Effective Date, and for the remainder of the Term, the Landlord shall perform ordinary maintenance and repair of the interior of the improvements on the Premises. In addition, the Landlord shall, at its own cost and expense without reimbursement by the Tenant, keep and maintain in good condition and repair, and make all necessary repairs and replacements to, the exterior walls, building slabs, foundations, structural parts and components, parking lots, gutters, downspouts, roof, roof membrane and coverings and any other part, component or system on the exterior of the Premises. The Landlord shall, at its own cost and expense without reimbursement by the Tenant, keep and maintain in good condition and repair, and make all necessary repairs and replacements to the sprinkler system, mechanical, HVAC, electrical and plumbing systems of the Premises. If the Landlord fails to perform any repair or replacement required to be made by the Landlord in this Lease, and the Landlord fails to cure such failure within 15 days after receipt of a written demand from the Tenant (or immediately, in the case of emergency repairs, including loss of heating and air conditioning), then the Tenant may make such repair or replacement and the Landlord shall reimburse the Tenant for the cost thereof. If the Landlord fails to pay such amount, then the Tenant may offset against the Rent due hereunder the amount so expended.
"Modifications" delineates your privileges to alter the rented area. Minor changes can be made without the owner's approval, yet significant adjustments turn into the landlord's possession. You are allowed to displace personal belongings, such as shelving or equipment, provided it doesn't impair the property. Comprehending this section can avert disagreements and aid in devising your business establishment effectively.
The Tenant may, at its own cost and expense and in a good workmanlike manner, make such alterations, additions, or improvements or erect, remove, or alter such partitions, or erect such racks, shelves, bins, machinery, furniture, fixtures, trade fixtures, equipment, and other personal property as it may deem advisable, without the consent of the Landlord. All fixtures and permanent alterations, additions, improvements, and partitions erected by the Tenant will be and remain the property of the Landlord during the Term, and will be abandoned by the Tenant at the expiration of this Lease. All racks, shelves, bins, machinery, furniture, equipment, and other personal property located in the Premises as of the Effective Date or otherwise installed by the Tenant may be removed by the Tenant at any time if the Tenant so elects. All such removals and restoration shall be accomplished so as not to damage the primary structure or structural qualities of the buildings and other improvements situated on the Premises.
The "Indemnity" provision safeguards both lessee and lessor. Being the lessee, you require asset and responsibility coverage, citing the lessor as an additional beneficiary. The lessor manages the insurance for injuries to the premises.
'Subrogation relinquishments' prevent insurance providers from reclaiming from the opposing party following a mishap. Your insurance provider should apprise the lessor 30 days in advance of discontinuation. Comprehending these stipulations fortifies your operation financially.
(a) At all times during the Term, the Tenant shall maintain, at its sole cost and expense, policies of insurance containing the following insurance coverages (which policies shall name the Landlord as an additional insured):
(1) Property insurance with premiums paid in advance insuring the Tenant’s property using the standard Special Causes of Loss Form or equivalent for the full replacement value. The foregoing is referred to in this Lease as “Property Insurance.”
(2) Commercial general liability insurance with respect to the Premises in amounts not less than $1,000,000 per occurrence, $2,000,000 aggregate limit using current ISO forms or equivalent.
(b) The Landlord shall obtain and keep in force during the Term of this Lease a policy or policies of insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof, as the same may exist from time to time, but in no event less than the total amount required by lenders having liens on the Premises, against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, flood (in the event same is required by a lender having a lien on the Property), and special extended perils ("all risk" as such term is used in the insurance industry). Such insurance must provide for a payment of loss thereunder to the Landlord or to the holder of mortgages or deeds of trust on the Premises.
(c) The policies required by this section must provide for standard waivers of any right of subrogation that the insurer of such party may acquire against the other party to this Lease, for losses that are actually insured against, even if the loss results from a negligent act or omission. The Tenant’s insurance company must provide the Landlord with a certificate of insurance on form ACORD-27 (for Property Insurance required to be carried under this Lease), or its equivalent, and ACORD-25 (for liability insurance required to be carried under this Lease), or its equivalent, which provides that the insurance may not be cancelled without giving the named insured at least 30 days’ prior written notice (or at least ten days’ written notice of cancellation in the event of the non-payment of premium). The Tenant may carry any required insurance under a blanket policy if that policy complies with the requirements of this Lease.
The "Default Occurrences" segment enumerates conducts deemed as lease violations. Common instances encompass overdue rent, encountering bankruptcy, or not abiding by lease conditions. Familiarize yourself with this portion and dodge these stumbling blocks to nurture positive landlord rapport and effectively operate your venture.
The following events will be deemed to be Events of Default by the Tenant under this Lease:
(1) The Tenant fails to pay any installment of the Rent hereby reserved when due, or any other payment or reimbursement to the Landlord required under this Lease when due, and such failure continues for a period of 30 days after the Tenant’s receipt of written notice of such nonpayment;
(2) The Tenant becomes insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors;
(3) The Tenant files a bankruptcy petition or Tenant is adjudged bankrupt or insolvent in proceedings filed against the Tenant;
(4) A receiver or trustee is appointed for all or substantially all of the assets of the Tenant; and
(5) The Tenant fails to comply with any term, provision, or covenant of this Lease (other than the foregoing in this section 18), and does not cure such failure within 30 days after written notice thereof to the Tenant, or such longer period as may be necessary to cure such default provided the Tenant has promptly commenced curing such default and is diligently proceeding to obtain such cure.
The "Holdover" section addresses scenarios in which you prolong your stay beyond the lease. Should you neglect to vacate by the termination of your lease period, you'd compensate 125% of the standard rental for every holdover month. It's pivotal to comprehend the expense of extended stays and formulate your departure blueprint accordingly.
If the Tenant holds over after the expiration of the Term and does not surrender the Premises prior to the expiration of the Term, then for each such month that the Tenant is holding over, the Tenant shall pay to Landlord 125% of the Rent due under this Lease for each month.
When a commercial lease contract reaches its term, various outcomes are possible. Here are some excellent sources that explain the likely situations:
Sure thing! Penalties for terminating a commercial lease early can differ, but there are some usual consequences:
Remember, specific penalties may vary according to the lease terms, so it's essential to thoroughly review the lease document to grasp the exact conditions related to early termination.
