Commercial local leasing contract

This guide summarizes the common features and clauses in a commercial local leasing contract. We will help you minimize your risks by taking appropriate measures to prepare your rent, and recommending the appropriate contract models.

The commercial local leasing contract. Features

The commercial local leasing contract gives the right to the occupation of the property for a period of time, in exchange for the payment of an income (daily, weekly, monthly, yearly…). This right allows the tenant to use and own the property without interfering with the landlord and others for the duration of his contract.

It also provides an advantage over the purchase of the premises due to the flexibility of its duration, cost and possibility of change. Let’s see what’s more thorough:

Advantages of renting a place

 Duration

The duration of the contract may vary between 1 and 25 years, and is usually from 2 to 5 years.

A short lease with the option to renew may be more appropriate, than a longer-term lease with termination clauses, as it avoids conflict.

Purpose and use of the local

All details of the purpose and use of the property must be included in addition to the additional rights that the landlord will grant the tenant. For example, the right to park a car.

Costs

The initial costs of a contract are, unless otherwise agreed, for the person acquiring the right. If you are going to rent it will be beneficial, because the costs for the formalization of the lease can be relatively low compared to the sale of a property.

Rights and responsabilities

Generally, if nothing else is agreed, in a short-term lease (from 1 to 3 years), the tenant will only be responsible for the interior of the local. The outside of the local must be maintained by the lessor.

The landlord and tenant have the ability to negotiate on any aspect of the lease agreement, including rights and responsibilities (such as repairs, upgrades, works, tax payments, insurance, etc.).

Regulation of the lease contract

The law 29/1994 of urban leases aims to provide the equity between the lessor and the tenant in the negotiation of the terms of a lease of locals, therefore, all the contracts will necessarily be regulated by this one.

The parties in a commercial local leasing contract

If you are the owner, you should consider: 

• If you rent your commercial property, you must take into account the different documents so that the tenant has the right rights to the legality, without losing control of the property.
• You should also know in advance the state and content of your local, making an inventory with everything that is relevant to it. It is worth noting the importance of the inventory in this sense, since if you do not to write it, we can have difficulties to show of who was the property of the goods that contained the building.

If you want to rent a local to start a business, you must take into account, in addition to your rights as a tenant:

• The amount of space you need.
• What will be the use of the property: Different clauses will be agreed depending on the destination for which it is rented.
• Your financial position: how much you can pay and in what way you should make payments.

Rental Models of commercial premises

Once you have decided that you are going to rent a property for commercial purposes, you must prepare the corresponding agreement. This is the time for the contract to be tailored to the needs of both parties, as some will need short-term leases, while others may require long-lasting or permanent tenure.

For that reason we will see the types of rentals of locals:

• A lease on the entire local. 
• A lease of only one part. 
• An agreement to share the space with another entrepreneur or freelancer. 
• Subleasing or assignment, with the same occupancy and use rights as the main landlord.

Transfer and subleasing

It is necessary to add that the transfer and subleasing of the commercial locals is legally contemplated as such, having the tenant, from the moment that it is agreed, the obligation to communicate it to the lessor. The latter has in turn the right to increase the income in:

• 10% If there is a partial subleasing of the local. 
• or 20% if there is a total subleasing of the local or transfer of the lease.

Basic commercial leasing information and documentation

• Identification of the parties: attaching a copy of their corresponding documents. 
• Location and description of the local: including an inventory of goods. 
• Object of the lease: purpose and use of the local. 
• Duration: Shall be the agreed by the parties. If nothing is reflected in the contract, its duration is one year.
• Price (rent to pay) and form of payment.
• Landlord and tenant rights and responsibilities.
• Bail: The amount deposited as bail is also negotiable although the legislation contemplates the deposit of the equivalent of two months rent.
• Expenses and taxes: Specifying who will take over. Rent-safe can be included.
• Additional clauses: the scoring and withdrawal. In the case of the sale of the local by the owner, the tenant is entitled to the scoring and withdrawal.

If you still have doubts about renting a commercial premises, get informed and let our expert lawyers advise you