A Pennsylvania commercial lease agreement is the legally binding contract that helps a business entity rent a commercial space, including retail buildings, offices, and industrial areas.
Overall, the lease defines the relationship between the business and landlord, laying out the responsibilities for each party.
What to Include
At the beginning of the commercial lease agreement, you should provide the start and end dates of the lease term. It's also helpful to have the legal names of the involved parties.
Next, you should have an overview of the commercial property, stating the type of space it is, the address, and the square footage. Include a brief description of how the tenant should use the premises, as well.
It's best to specify the type of commercial lease agreement you use, including triple net, gross, and modified gross. Provide everything a tenant is required to do to ensure that the commercial property functions correctly, such as general maintenance and cleaning sessions.
Your Pennsylvania commercial lease should also focus on the base rent amount and due dates and provide information about who is responsible for receiving communications and payments. Explain what happens if the tenant doesn't pay rent within the agreed-upon lease terms.
Most landlords require tenants to pay a security deposit to cover maintenance and damage to the commercial space as needed. Here, a landlord should provide the necessary amount and where they hold the funds.
Your commercial lease should have these clauses:
- Judgment Clause - Pennsylvania law indicates that the commercial lease could contain the confession of judgment clause for repossession of the property and monetary damages. If the tenant defaults on the terms, the landlord can enter this document in court without providing notice to the tenant. The tenant cannot dispute this clause. Such a provision isn't allowed in other states because it provides the landlord with a powerful and immediate remedy if the tenants default.
- Not Required to Mitigate Damages - The law doesn't require the landlord to mitigate damages if the tenant defaults. If the tenant doesn't pay rent, a landlord may sue them for the balance due on the lease until the termination date. Landlords don't have to find a replacement tenant.
- Waive Statutory Rights - Pennsylvania has a Landlord and Tenant Act that creates a basic framework for everyone's rights. However, the conditions and terms in the written commercial lease might change or waive them.
- Use Clause - This determines what your property can be used for. It might state that the building is only available for warehousing, restaurant, or retail companies. When a landlord limits usage, they find it easier to lease again to a similar business without overhauling their Pennsylvania property.
- Exclusivity Clause - A tenant might request this clause if they're concerned about a landlord leasing nearby space to a company that might compete with theirs. For instance, a retail shoe brand might put in this cause so that landlords can't lease the area next door to a shoe store.
- Assigning and Subletting - Subletting might be advantageous for both the landlord and tenant. When the original tenant can't afford rent or goes out of business, the landlord still earns income. Still, the tenant shouldn't get full discretion. It's best to limit or restrict the tenant's ability to sublet.
Generally, Pennsylvania law requires the landlord to disclose specific information to the tenant about the name/address of the bank where the security deposit is. Here are other disclosures you may wish to include if they pertain to you:
- Licenses and Permits - You should request a copy of federal, state, and local permits the business/tenant needs to use the premises. It must also be kept on-site and should be accessible and produced when anyone requests to see them.
- Insurance - Tenants should have appropriate business insurance, though the landlord can continue having property damage liability. It's up to the tenant to know which products are needed. If none is purchased upon signing, the tenant agrees not to hold the landlord responsible for damages.
As a landlord, you probably want to keep your business organized and efficient. Therefore, it's best to download your Pennsylvania commercial lease template now in PDF or Word format. DoorLoop lets you customize the business document to meet your needs.
Drafting a lease contract might seem difficult initially. However, going through each clause carefully helps you complete a document that both parties agree upon, which avoids problems.
It's best to download a template and customize it. Fill in the right information, including expenses, cost of rent, and other appropriate things. Then, you can sign it and have your tenant do so as well.
Do Commercial Leases Have to be Notarized in Pennsylvania?
No. Commercial leases don't have to be notarized in this state to be legally valid. However, either party (or both) might request this service if they wish.
Can a Tenant or Landlord Hold Negotiations on Operating Expenses Before the Lease Is Signed?
Yes. Both the landlord/owner and the tenant are allowed to negotiate a better deal for themselves. However, neither party is required to accept the new terms.
There are various elements that affect the final cost. Typical triple net leases require the tenant to pay part of the operating expenses. However, they might negotiate a lower charge each month by excluding certain things, such as the repairs caused by other businesses, management fees, and capital expenses for the landlord.
Can a Landlord Prevent the Tenant's Business Sign from Getting Displayed?
It depends on the lease. Tenants should specify signage contingencies and rights, or the landlord might demand that the sign be removed or moved elsewhere.
If the premises has a marquee out front, the tenant should negotiate the lease terms to display their business sign there, too. When there's no marquee out front, tenants might request that they be allowed to get one installed. The landlord could agree to that, but it must be in the lease to ensure that things are done correctly.