A commercial real estate lease term sheet is a non-binding agreement outlining the key terms of a proposed lease agreement. It is a vital tool for both landlords and tenants, as it helps to ensure that both parties are on the same page before moving forward with a formal lease agreement. A well-written lease term sheet can help to avoid costly disputes down the road and can save both parties time and money.
There are many different types of commercial real estate lease term sheets, but they typically include the following information:
- The names and addresses of the landlord and tenant
- The property address
- The term of the lease
- The rent amount
- The security deposit amount
- The CAM charges (common area maintenance)
- The utilities that are included in the rent
- The parking arrangements
- The tenant improvement allowance
- The lease renewal options
Once both parties have agreed to the terms of the lease term sheet, they can move forward with a formal lease agreement. The lease agreement will be a legally binding contract, and it will include all of the terms that were agreed upon in the lease term sheet.
Key Considerations for Commercial Real Estate Lease Term Sheets
When negotiating a commercial real estate lease term sheet, there are several key considerations that both landlords and tenants should keep in mind. These include:
- The term of the lease: The term of the lease is the length of time that the tenant will occupy the property. It is important to negotiate a lease term that is long enough to meet the needs of the tenant, but not so long that the tenant is locked into a lease that is no longer suitable for their business needs.
- The rent amount: The rent amount is the monthly payment that the tenant will make to the landlord. It is important to negotiate a rent amount that is fair and reasonable for both parties.
- The security deposit amount: The security deposit is a sum of money that the tenant pays to the landlord at the beginning of the lease term. It is used to cover any damages to the property that are caused by the tenant.
- The CAM charges: CAM charges are common area maintenance charges. These are the costs of maintaining the common areas of the property, such as the parking lot, hallways, and landscaping. It is important to understand what CAM charges are included in the rent and what CAM charges will be paid by the tenant separately.
- The utilities that are included in the rent: Some leases include the cost of utilities in the rent, while other leases require the tenant to pay for utilities separately. It is important to understand what utilities are included in the rent so that there are no surprises later on.
Negotiating a Commercial Real Estate Lease Term Sheet
Negotiating a commercial real estate lease term sheet can be a complex process. It is important to have an experienced attorney represent you during the negotiation process to ensure that your interests are protected. An attorney can help you to understand the terms of the lease term sheet, negotiate favorable terms, and draft a formal lease agreement that is legally binding.
The negotiation process can be time-consuming, but it is important to take the time to get it right. A well-negotiated lease term sheet can help to avoid costly disputes down the road and can save both parties time and money.
Once the lease term sheet has been negotiated and agreed upon, both parties can move forward with a formal lease agreement. The lease agreement will be a legally binding contract, and it will include all of the terms that were agreed upon in the lease term sheet.
