A business entity or tenant may lease an office space, retail establishment, or other commercial structure under a Massachusetts commercial lease agreement. The terms, conditions, and obligations of maintaining and renting the business space are outlined in this contract, which also defines the relationship between the tenant and landlord.
Furthermore, a business owner in Massachusetts must get a commercial lease before renting out a space for their operations. These are fairly similar to the type of agreements a person would create for a residential property, but there are a few modifications that make it a better choice for a business to take into account. The fact that commercial leases often have a longer term than other leasing arrangements is one of its most important advantages. They are dependable options that a business owner can select, and the majority of the available choices will be advantageous to the business tenant.
Different types of commercial leases in Massachusetts include:
- A Gross Lease: Many renters like this type of commercial lease because it only asks them to pay the monthly fee for the unit. The landlord is responsible for any additional costs. However, the rent demanded for the lease may be slightly higher with this choice because the landlord is expected to cover building expenses.
- A Triple Net Lease: Because it compels the tenant to handle the majority of costs, including the rent payment, the taxes, and the insurance, this sort of lease will greatly benefit the landlord. A renter may become more responsible and prepared to purchase their own place rather than continue renting it as a result of having to perform the necessary repairs to the apartment.
- A Percentage Lease: This can be a great choice for a newly established firm. The initial rent will be minimal, but as soon as the business becomes successful, the tenant will be required to pay the landlord a portion of the profits. Most renters who are just starting out will want to pay a lower amount until the business is up and running and beginning to turn a profit.
- A Modified Gross Lease: The tenant and landlord can use this option to divide costs and determine what will work best for their particular arrangement; for instance, although the landlord handles maintenance and property taxes, the tenant could be liable for the rent, insurance, and utilities. This document must specify the arrangement that has been chosen.
What to Include
Massachusetts has regulations that uphold landlords' rights to supply the services they do, making it a "landlord-friendly" state.
There aren't many items that must be in a commercial lease by law, in contrast to residential leases. According to Massachusetts law, commercial leases are only void if they are insufficiently clear about the core provisions.
Depending on the type of lease agreement being discussed, different information will need to be included when drafting a contract. However, the following information must be included in all lease agreements:
The address of the unit must be written down in this section of the paperwork, along with any other information that can help identify the property. Make sure the location of the unit is identified in the paperwork, along with the county and any intersecting streets. This also applies to residential leases.
It is vital to note that the premises may not refer solely to the commercial unit. It may also include other spaces such as parking areas, bathrooms, hallways, and elevators.
The names of the parties, as well as the names of the businesses, must be included in the party information because this is a business agreement. This is necessary since the agreement will actually be made between the business and the management company, and the paperwork must name both parties. Aside from that, make sure the document also includes each person's phone number.
Lease Terms and Expenses
The actual terms of the lease will be the next portion of the paperwork that has to be covered. This will include the monthly rent owed, the security deposit requested by the landlord, the lease term, and the procedure the tenant must take when the lease needs to be renewed. Include any additional costs that will be borne by the tenant as well as the monthly utilities that they will be required to pay. Included in this part should be a list of everything the landlord is responsible for. Who is responsible for improvements to the property is another example of what could be included under this section.
Both parties must sign and date the agreement in the final section of the paper. It is recommended, as with the majority of company rental agreements, to have the document notarized, albeit it is not necessary in this state. In order for a rental agreement to be valid, it needs to be signed by both parties.
Before the tenant moves their company into the commercial property, the landlord is obligated to provide the tenant with certain information in any new leasing relationship. The disclosures in the state of Massachusetts include:
Security Deposit Location Disclosure
The lessor will have to reveal the location of the security deposit when a new tenant takes over renting a unit in a commercial space. They must inform the renter of the location of the bank, the deposit amount, and the account number within 30 days.
Fire Insurance Disclosure
The landlord must obtain fire insurance for the commercial space they are renting out in the state of Massachusetts. Within 15 days of signing the commercial lease agreement and moving into the space, the renters who are letting the unit must be informed of the terms of the insurance policy, per section 21 of Chapter 186.
Lead-based Paint Disclosure
Landlords are required by federal law to inform prospective renters that lead-based paint may be present in the rental unit. Anyone renting a space in a structure constructed before 1978 must receive this disclosure. Buildings back then used this type of paint, and it is still around today, posing a risk to young children and pregnant women.
- All landlords in this state are required to carry fire insurance on the properties they own. Within 15 days after the lease's signature, all tenants must be informed of the details of the fire insurance.
- If lead-based paint is present in the rental space, the landlord must disclose this information to the tenant. Lead-based paint, which can be dangerous for pregnant mothers and young children, may have been used on any structure built before 1978.
- Commercial lease agreements must disclose payment for every cost associated with the unit. This will include who is responsible for paying the property's taxes, utilities, and insurance. Depending on the kind of commercial lease that is negotiated, this could either be the tenant or the landlord and can vary from one property to the next.
- Additionally, the bank or account where the security deposit is being maintained must be stated. The tenant shall have knowledge of the amount placed in the account, the account number, and the name of the bank within 30 days after the date of the lease.
Build Your Own
You can make your own Massachusetts commercial lease agreement if our sample forms don't allow you to incorporate all the information you desire.
Using the eForms agreement creation tool is one way to accomplish this. Simply provide the necessary details on DoorLoop to create your own agreement! If you're looking for a template, we have two available options for you:
The Bottom Line
Running a rental business requires creating thorough lease agreements, so if this is your first time drafting one, it is a good idea to use software such as DoorLoop to speed up the procedure! Get your free form today!
Does a Massachusetts Commercial Lease Agreement Need to be Notarized?
No, a commercial lease is not required to be notarized in order to be valid in Massachusetts; nevertheless, any party to the lease can elect to have the commercial lease notarized.
Can a Tenant Sublease a Part of the Property?
In general, a tenant can sublease the property if they receive consent from the landlord. However, it's crucial to keep in mind that this consent cannot be unreasonably withheld or delayed.
Can All Types of Tenants Rent a Commercial Property?
No, only tenants intending to use the property to operate a business, such as a restaurant, factory, retail space, or office, can enter into these legally binding contracts.
What Happens If a Tenant Damages the Property?
In addition to regular wear and tear, renters have a responsibility to maintain the property they use for their business. Eviction or other measures may be necessary when a business tenant seriously damages the property. The laws and regulations apply to the repair of damage to walls, structures, appliances, and much more. Generally, the tenant will have an obligation to repair all damages; therefore, the lessee has the liability.