Commercial leases in Louisiana are fairly simple to understand. While these contracts are different from residential leases, they still share some similarities, so you shouldn't have any problems after reading this page.
The primary difference between a commercial lease and a residential lease is that the commercial one tends to be much longer. Some commercial leases even go on for 10 years, whereas residential ones don't typically last more than a year.
In that sense, it's vital for the business owner and the landlord to come to a reasonable agreement surrounding the leased premises. The following page will outline everything you need to know about commercial leases in Louisiana, including how you can write one and some vital clauses you must consider, including the force majeure clause, rent payments, early termination clauses, and more.
According to Louisiana law, there are several lease types you can consider for your commercial space. Thanks to the variety of Louisiana lease agreements, you can choose something that is beneficial for both parties. The most important lease types you can consider include:
- Percentage Lease: In a percentage lease, the landlord will receive a percentage of the profits the business owner gets in exchange for paying a lower amount of rent. This type of lease is mostly used by retail stores and new business owners.
- Gross Lease: Here, the tenant will only pay rent as stated in the Louisiana lease, whereas the landlord will pay for all the other expenses surrounding the commercial property, including common area maintenance, utilities, taxes, and insurance. Landlords typically charge higher rent prices here.
- Triple Net Lease: In this case, the tenant will be responsible for paying for rent and any other running costs surrounding the commercial properties, including property taxes, maintenance, and more. This lease type is better suited for landlords who want to avoid taking care of too many things surrounding the property.
- Modified Gross Lease: The following legally-binding contract allows the tenant and landlord to agree upon who will pay for the expenses surrounding the leased premises. If you're looking for a good middle-ground option, this is it.
How to Write
Now that you know the permitted lease types you can consider as a landlord, let's cover how to write an effective Louisiana commercial lease. Regardless of the lease type, the document must include all of the sections mentioned below so that it's valid.
Introduction | Primary Factors
First, let's cover the basic information about the parties involved in the lease agreement, including the names and contact information. Additionally, the landlord must include a detailed description of the leased premises, including its square footage, address, type of property, and finally, the lease term dates.
The document must include a clause that outlines how the tenant will manage their business operations within the unit. In that sense, the agreement must include the tenant's obligations to keep the unit in good shape, including cleaning sessions, general maintenance, and others.
Landlords who choose to work on a modified gross lease must include a clause that outlines who will cover the following expenses:
Rent, Security Deposit, and Renewal
In every case, the tenant pays a fixed amount of rent each month. The lease document must include the exact amount they must pay, as well as late fees, rent increases, and any other casualty the landlord considers appropriate.
The landlord is free to specify the consequences of tenants not paying rent on time. Regarding renewals, if the landlord decides to allow for automatic renewals, they may discuss future rental increases, if appropriate.
As for the security deposit, this is used to cover excessive damage to the property that exceeds usual wear and tear. The tenant pays for this deposit at the beginning of the lease, and the owner will specify how the funds will be used and where they'll be saved.
Once the commercial lease ends, the owner must give the security deposit back to the tenant. The deposit cannot be unreasonably withheld.
Licenses and Permits
The Louisiana commercial lease must include information on all the documentation and permits the tenant's business should have before operating in this state. Moreover, the unit itself must comply with Louisiana law so it can be rented to any other party.
Keep in mind the following clauses when renting your premises to another person:
- Right of Entry
- Indemnification and Bankruptcy Statements
On the other hand, you may consider including the following clauses for the lessee to follow, although they aren't mandatory:
- Pet Terms
- Advertising Terms
- Sign Placements
- Smoking Rules
Subleasing: Overall, the lessor can include a sublease provision for the lessee if they consider it appropriate. Subleasing is legal in Louisiana as long as the lessor includes the clause in the document.
Evictions: Landlords in Louisiana are free to terminate the lease automatically in case one of the following scenarios applies:
- Criminal activity in the building
- Nonpayment of rent
- Breaching the contract in any way
Renovations: If the lessor wants to allow the lessee to do renovations to the property, they must include a clause that states the obligations and rules the lessee has to follow to do these renovations correctly.
Force Majeure Clause: The force majeure clause frees all the parties involved in the lease from any obligation in case an event prevents any of them from performing as usual. Overall, the document must include a detailed explanation of what events constitute a force majeure event.
Generally speaking, the only mandatory disclosure that the lessor must include in the business contract is the lead paint disclosure.
According to the law, if the business unit was built before 1978, the lessor must include a clause in the contract that outlines the presence of this material in the unit. Moreover, they may have to provide the lessee with a copy of the EPA's pamphlet on lead paint.
Build Your Own
Drafting a commercial lease agreement yourself can be overwhelming, which is why we offer to download a free form on our website. This free form includes all of the information you need to get your commercial lease started, and you can download it in Word or PDF format.
Moreover, if you want to update the commercial lease form with any particular clauses surrounding your business, feel free to download the customizable version of the document.
The key to a healthier landlord-tenant relationship is to have leases that all parties understand and agree to. If you follow all of the business terms in this form, you're likely to have an excellent relationship with each party involved in the commercial lease.
On the other hand, if you want to save some time on the process, feel free to claim the free form on our website. You can also update the document with any new obligations you feel are important for all parties to follow.
Do Leases in Louisiana Need to Be Notarized?
Aside from signing these contracts, Louisiana law doesn't require any party to get the document notarized. However, if any party decides to get it notarized, they're free to do it.
What Type of Lease Is Best for Landlords?
It depends on your business goals. You may want to review each of the lease types stated on this page to see which one feels more appropriate. However, the most appropriate contracts that can benefit a business unit owner are the ones involving a triple net lease.
Are You Allowed to Update Your Lease Terms?
Absolutely! A business unit owner can update the terms and regulations of the contract. However, keep in mind that, if you got your form notarized in the first place, you must notarize it again after making changes.