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The California commercial lease agreement is a contract used specifically to rent commercial spaces to businesses. This written document describes the terms and conditions associated with renting industrial spaces, retail stores, and office space. This type of lease is often more complicated than a standard residential lease. A commercial lease agreement is a legally binding contract between a landlord who owns a commercial property and a tenant who wishes to rent the commercial property with the intention to operate a business. The commercial property being rented generally falls into a retail, office or industrial space category. Three basic types of commercial leases exist. Each one has positive and negative aspects for the landlord and tenant. The three variations of commercial leases are defined as:
Commercial lease agreements can have a significant impact on the financial well-being of all parties involved. It is important that the landlord and tenant fully understand and agree to the terms of the lease proposed prior to signing it into a legally binding document. Required Disclosures for a Commercial Lease Agreement in CaliforniaDisclosures that must be included in a commercial lease agreement vary depending on individual state regulations. This section lists all disclosures that should be addressed in a commercial lease agreement in the state of California:
Commercial lease agreements exist to protect the rights and business interests of the landlord and tenant. Here is a list of all sections necessary to include in a legally-compliant commercial lease agreement in the state of California, along with descriptions of list items as applicable:
California-Specific ConsiderationsAs in residential lease agreements, commercial leases are subject to regulations that vary by state and local government. This section describes some legal considerations of commercial lease agreements that are specific to the state of California. SublettingPrior to subletting their rental property, a commercial tenant must obtain permission from the landlord. If the tenant does not obtain this permission, they may face harsh consequences, including eviction. The tenant’s request to sublease should include:
California law dictates that a landlord must not deny permission to sublet without a valid reason. If the landlord has a valid reason to deny subletting, they must document their reason in writing. If it is not properly documented, it is assumed that the landlord is providing consent to sublease. Key MoneyKey money is a phrase that describes an undocumented payment to a landlord in exchange for the ability to rent a property. While it may be tempting for a landlord to require these extra funds from commercial tenants, it is an inappropriate way for the landlord to take advantage of the competitive commercial rental market. The payment and acceptance of key money is strictly prohibited in the state of California. If a landlord asks a tenant to pay key money, the tenant may receive three times the damages incurred by denial of renting the unit. Rent Control and Commercial PropertyRent control refers to the practice of enforcing a maximum amount of rent and the regulation of rent increases. In California, rent control is used in the residential properties of larger cities, such as Los Angeles and San Francisco. Rent control does not apply in commercial properties in California. Enforcing rent control restrictions among commercial properties is viewed to limit competition and provide unfair advantages to certain businesses. Although rent control is not enforced at the state level, commercial landlords may still place an upper limit on rent in accordance with certain organizations. EvictionsEvictions from commercial property are handled in a similar way to evictions from a residential property in the state of California. Valid reasons for eviction from a commercial property include:
It is important that commercial lease agreements are created in as much detail as possible. In the event of legal action, issues that are not explained in the commercial lease agreement are subject to interpretation. Rights and protections of the landlord and tenant that are not explicitly listed in the commercial lease are assumed to be omitted intentionally. Does California have a standard lease agreement?A standard California residential lease agreement is a fixed-term contract (start and end date) between a landlord and tenant for the renting of property. The process usually begins with the tenant viewing the property and completing a rental application (which may require a fee).
Does a commercial lease need to be notarized in California?This question is about California Commercial Lease Agreement
Yes, a commercial lease needs to be notarized in California. If there are any additions to, or modifications of, the commercial lease, those must also be notarized. The lease should be notarized before the commercial tenant moves into the rental space.
What is in a commercial lease California?Types of Commercial Leases
Property expenses include real estate taxes, property insurance, and common area maintenance. The first type of commercial lease is a gross lease, in which the landlord covers all property expenses and the tenant pays a monthly cost for rent of the space.
How much notice does a commercial landlord have to give in California?The usual notice is that of 30 or 60 days. The notice will vary based on which part of the lease your tenant breached.
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