After accepting a rental application, drafting a reasonable and effective commercial lease agreement is the key to achieving a healthy landlord-tenant relationship. Overall, commercial leases are considerably different than residential leases since commercial ones involve a few more rules and regulations for business owners who want to rent a space to operate their projects.
Most commercial leases vary from state to state, as with residential leases. We want to help landlords, tenants, and real estate investors to be as comfortable as possible when it comes to the rental of a commercial property, which is why this page is for you.
Here, we'll outline everything you need to know about the New Jersey commercial lease agreement, the provisions you must include as a landlord to comply with the law, and other vital information for all the parties involved with the property.
New Jersey Lease Agreements
The first thing you need to consider regarding commercial real estate is that there are three types of leases you can apply for your property in New Jersey. Those include:
- Gross Lease: In this lease type, the tenant will only pay for monthly rent, whereas the landlord will be responsible for paying property taxes, insurance, and other area expenses. Gross leases are considered tenant-friendly.
- Triple Net Lease: These are considered landlord-friendly. Here, tenants are responsible for paying for everything, including rent, taxes, and area expenses.
- Modified Gross Lease: The modified lease is considered a combination of the two previously mentioned leases. It serves as a good middle ground for both landlords and tenants.
Write Your Own
In this section, we'll cover everything the landlord and tenant must know about commercial lease agreements in New Jersey. As mentioned before, most commercial leases are different from residential leases, which is why it's critical for all parties involved, including real estate investors, to be aware of these rules.
Thankfully, commercial lease agreements in New Jersey are fairly simple and don't involve many "extra" requirements or provisions.
Introduction | Primary Factors
The landlord must include basic information for the document, including the legal names of all the parties involved in the contract, the address of the leased premises, and the beginning and end date of the lease.
Description of the Commercial Property
Include a detailed description of the property, including its utilities, square footage, and the type of commercial property it is.
Use of Premises
The landlord and tenant must state how the commercial space will get used during the lease term.
Type of Lease
Explain the type of lease you intend to use to lease the premises to the tenant.
The following section will outline all of the tenant's responsibilities regarding the proper functioning of the commercial space. This includes general maintenance, cleaning, and more.
This clause will outline who is the responsible party for handling the following expenses:
Rent, Security Deposit, and Renewal
Base Rent Amount
Here, the landlord may state the base rent amount, as well as the due date of each payment.
Default and Possession
Indicate all of the consequences of not paying or remitting rent within the specified period.
Overall, a landlord in New Jersey doesn't have the legal obligation to renew a commercial lease. Moreover, the tenant cannot extend the lease term without approval. In case the landlord decides to renew the lease, they must include a clause that outlines the conditions.
The security deposit is used by the landlord to cover any significant damages caused to the leased premises. Landlords may request a reasonable deposit amount from the tenant and outline where that money will get saved until it's needed.
Licenses and Permits
All commercial premises in New Jersey must comply with state laws. Moreover, the tenant's business will also need to have the right documentation, licenses, and permits to operate according to the New Jersey law guidelines.
Moreover, in case the tenant ever wants to make an improvement to their business (and therefore, the premises), they must first consult the landlord. On the other hand, the landlord can include a clause in the commercial leases that outlines the permissions for improvements.
Some other vital factors a landlord can consider for their commercial leases include the following:
- Bankruptcy Statement
- Indemnification Statement
- Right of Entry (Providing Written Notice)
- Notice Addresses
Some things that could be included in an agreement but aren't necessarily required by law include:
- Advertising Policies
- Pet Policies
Damage to Premises
If the tenant ever causes damage to the unit beyond regular wear and tear, they must provide the necessary repairs at their expense until they restore the property to its optimal condition.
A landlord may evict their tenant from the premises for any of the following reasons:
- Nonpayment of rent
- Breaching the lease agreement
- Doing activities that go against NJ law (criminal acts)
Surrender of Premises
The tenant must deliver the vacant possession before or during the last day of the contract. Moreover, the tenant has the responsibility of delivering the unit in an optimal condition, with the exception of regular wear and tear.
Every landlord in NJ may reserve the right to designate any parking areas within the business area. In case the landlord decides to provide parking spaces for the tenant, the tenant must provide a list with all of the license numbers for the cars of the business.
In case the landlord provides a separate structure parking space, they may request the tenant to pay for a monthly rental.
The tenant is legally allowed to place signs for their business in the rental unit, as long as they have consent from the landlord. Moreover, these signs must be permitted by applicable zoning ordinances.
Landlords can refuse consent for the tenant's sign proposal if they find it too unattractive, inconsistent, deceptive, or large for the premises. On the other hand, the landlord may assist the tenant in getting the necessary permissions to place the sign.
In case the tenant causes any damages while placing or removing the sign from the business building, they must pay for all the repairs.
Both the landlord and tenant must sign and date the contract for it to take effect in eyes of the law. If any of the parties feel comfortable, they may also request to get the document notarized.
Leases in New Jersey don't have many mandatory disclosures to include (this applies for both commercial and residential leases).
The primary thing that all parties must be aware of while drafting the contract is lead-based paint.
According to federal laws, if your building got constructed before 1978, you must disclose that lead paint may have been used during the construction period. The tenant must be aware that lead paint tends to be a hazardous substance, especially for children and pregnant women.
Drafting agreements that comply with the law can be overwhelming, especially when it comes to a business form. To make things easier for you, we've created a form you can download in Word or PDF format.
Moreover, you can edit the form to fit your business and rental needs. All you have to do to access these customizable agreements is to go into the website, select "Commercial Lease Agreements," and choose the option that fits your building needs the best.
Leasing your office space/land can provide you with several benefits. However, if you want to have the best landlord-tenant relationship possible, you must ensure that the document has every detail ironed out so that there are no legal problems with the business in the future.
The good thing about New Jersey laws is that there aren't many restrictions regarding the rental of an office, so you're free to include your particular clauses and requirements as long as they're reasonable under NJ laws.
Don't hesitate to create the most effective document possible today, and download our free form from our website!
DoorLoop hosted this webinar with attorney Craig Rothenberg from The Law Office of Craig Rothenberg to help answer many of your legal questions. Craig specializes in real estate law and evictions in New Jersey and we covered:
- Landlord-tenant issues and laws
- Grounds to evict a tenant
- Eviction process
- Preventing delays or fines
- Hiring an Attorney vs DIY
- Post COVID legal changes
Feel free to learn more and watch this webinar for free.
Do Commercial Lease Agreements in New Jersey Need to Be Notarized?
Legally speaking, your lease document doesn't have to be notarized to work. However, many landlords and tenants prefer to get these agreements notarized. You may choose the option that best suits your needs.
Can You Customize Your New Jersey Commercial Lease Template?
Yes, you can customize your building rental document to your needs. While every document shares similar clauses, such as the ones mentioned on this page, you may have certain personal clauses you may want to include regarding payments, materials used for the unit, the extra cost of utilities, notice requirements, and other things.
Feel free to take our template and customize it until you have everything you need.
Do New Jersey Commercial Leases Need to Be in Writing?
It depends on the length of the lease. In most cases, a business owner can create a verbal rental agreement with the landlord, and there are no limitations on the length of the term as long as it's shorter than three years.
In case the length of the lease goes beyond three years, the N.J.S.A 25:1-12 requires the landlord to create a written lease so that it complies with state laws.