A commercial lease term sheet is a non-binding agreement that outlines the key terms of a proposed commercial lease. It is used to facilitate negotiations between the landlord and tenant and sets the stage for the drafting of a formal lease agreement. Commercial lease term sheet templates can be found online or through real estate attorneys.
Commercial lease term sheets typically include the following information:
- Name and address of the property
- Names of the landlord and tenant
- Lease term length
- Rent amount and payment schedule
- Security deposit amount
- Tenant’s use of the property
- Insurance requirements
- Maintenance and repair responsibilities
- Parking
- Exclusivity
- Subletting and assignment
- Default and termination
Key Components of a Commercial Lease Term Sheet
The following are some of the key components of a commercial lease term sheet:
Lease Term: The length of the lease term is one of the most important terms to negotiate. Commercial leases typically range from 3 to 10 years, but can be shorter or longer depending on the needs of the landlord and tenant.
Rent: The rent amount is the monthly or annual payment that the tenant will make to the landlord for the use of the property. Rent can be fixed or variable, and may be subject to increases over the course of the lease term.
Security Deposit: The security deposit is a sum of money that the tenant pays to the landlord at the beginning of the lease term. The security deposit is held by the landlord as a guarantee against any damage to the property or unpaid rent.
Tenant’s Use of the Property: The lease term sheet should specify the tenant’s intended use of the property. This is important to ensure that the property is being used in a way that is consistent with the landlord’s plans for the property and that is not in violation of any zoning laws.
Insurance Requirements: The lease term sheet should specify the insurance requirements for the property. This will typically include general liability insurance, property insurance, and business interruption insurance.
Maintenance and Repair Responsibilities: The lease term sheet should specify who is responsible for maintaining and repairing the property. This can vary depending on the type of property and the terms of the lease.
Negotiating a Commercial Lease Term Sheet
Negotiating a commercial lease term sheet can be a complex process. It is important to have an attorney review the term sheet before you sign it. An attorney can help you understand the terms of the lease and negotiate on your behalf to ensure that you are getting a fair deal.
Once the term sheet has been negotiated and signed, it will be used to draft a formal lease agreement. The lease agreement will be a legally binding contract that will govern the relationship between the landlord and tenant.
Commercial lease term sheets are an important tool for negotiating commercial leases. By using a term sheet, you can set the stage for a successful lease agreement that meets the needs of both the landlord and tenant.
