Commercial lease agreements differ in several important aspects from residential lease agreements. Commercial properties refer to rental units that are not used for residential purposes but exclusively for commercial activities. This includes offices, retail spaces, and warehouses, among others. But why do commercial lease agreements have a special status, and what should tenants and landlords consider before signing a contract? Here, you will learn everything important about the particularities of commercial lease agreements and what must be considered when drafting them.
What is a Commercial Lease Agreement?
A commercial lease agreement is made between a tenant and a landlord when the premises are intended to be used for business purposes. In contrast to residential lease law, which is strictly regulated by the legislature, commercial lease law offers much more flexibility. Commercial lease law is not an independent legal field but primarily relies on general lease law, which is regulated in §§ 535 ff. and §§ 580a of the German Civil Code (BGB). Since contractual freedom plays a central role in commercial lease agreements, individual agreements between the contracting parties can be made, which may differ significantly from the standard regulations for residential leases.
When is a Commercial Lease Agreement Needed?
A commercial lease agreement is necessary when the premises are used for business purposes. Typical examples of commercial spaces include:
- Retail stores used for trade,
- Offices where services are offered or managed,
- Medical practices or other healthcare facilities,
- Warehouses or storage spaces for goods or materials.
Entrepreneurs who rent these or similar spaces generally enter into a commercial lease agreement. The specific contents and clauses of such a contract can vary significantly depending on the individual needs of the tenant and the expectations of the landlord.
What Flexibility and Regulations Exist in the Contractual Agreement?
Unlike residential lease agreements, flexible arrangements can be made in commercial leases. For instance, it is possible to conclude the contract orally, as long as the lease term is less than one year. Nevertheless, for legal certainty, it is always advisable to sign a written lease agreement. A written contract provides both parties with a clear foundation in case of disputes or legal issues.
How the contract is structured in detail is largely at the discretion of the contracting parties. The landlord usually provides a draft contract, but the tenant can also propose changes or amendments. It is advisable to carefully review all important points and seek agreement early in case of uncertainties or disagreements.
What Should Be Included in a Commercial Lease Agreement?
A well-drafted commercial lease agreement is essential for both parties – tenant and landlord – to ensure a smooth rental relationship and avoid legal disputes. The essential points that should be included in such a contract are:
- Identification of the contracting parties: Both the tenant and the landlord should be clearly named, including legal representatives or company names.
- Specification of the intended use: The exact purpose of the premises must be clearly defined, as this can affect permits and structural requirements.
- Rent amount, additional costs, and security deposit: The monthly rent, any advance payments for operating costs, and the amount of the security deposit must be specified in detail.
- Lease duration and termination notice periods: Both the lease term and the conditions under which termination is possible should be clearly defined.
- Special characteristics of the rental property: The size of the premises, amenities, condition at handover, and other specific features should also be documented.
What Should Tenants and Landlords Consider?
What Should Tenants Consider?
For tenants, it is particularly important that the lease agreement offers both flexibility and security. The key aspects include:
- Lease duration and termination notice periods: Short termination notice periods offer more flexibility, which can be advantageous in the case of a quick relocation. A long lease term, on the other hand, provides planning security, especially for long-term business plans.
- Usage rights: Many businesses must also clarify whether they have the right to install signage on the building or if there are restrictions on the layout of the premises.
Additionally, it is advisable to have the contract reviewed by a legal professional or real estate expert before signing. Comprehensive legal advice is especially useful for larger commercial properties.
What Should Landlords Consider?
Landlords of commercial properties also have several points to consider to ensure they are legally protected and their interests are safeguarded. These include:
- Maintenance and modernization: Responsibility for maintaining the premises can be shared between tenant and landlord. Usually, the landlord is responsible for the general maintenance of the building, while the tenant takes care of the condition of the interior spaces they use.
- Solvency check of the tenant: Before concluding a lease agreement, the landlord should check the financial stability of the tenant. A look into the commercial register or a credit report can help minimize the risk of payment default.
Rent and Operating Costs: What to Consider?
A key point in drafting a commercial lease agreement is determining the rent amount. Agreeing on a fixed rent provides the tenant with financial planning security, but many landlords prefer index-linked or graduated rents that adjust over time to market conditions or increase regularly. These rental models are common in prime locations.
In addition to the rent, operating costs must also be clearly regulated. These include costs for waste disposal, water supply, heating costs, and expenses for general building cleaning or security services. It is important for tenants to check which additional costs they are responsible for and whether there are any hidden costs before signing the contract.
Termination of the Commercial Lease Agreement
The termination of a commercial lease agreement is usually governed by the individual provisions in the contract. For open-ended contracts, termination can occur according to the notice periods specified in the contract, with a statutory notice period of six months applying if no other agreement is made. In the case of fixed-term contracts, early termination is generally excluded unless a special termination clause is agreed upon.
Checklist: Important Points in a Commercial Lease Agreement
To ensure both tenant and landlord are legally protected and misunderstandings are avoided, a commercial lease agreement should include at least the following points:
- Clear identification of the contracting parties,
- Clearly regulated rent amount and type of rent (e.g., fixed rent, index rent, graduated rent),
- Overview of operating costs and additional costs,
- Agreements on the lease term and termination notice periods,
- Specifications of the type of business and intended use of the premises,
- Special characteristics of the rental property (e.g., amenities, condition at handover).
A commercial lease agreement is a complex document that should comprehensively protect both tenants and landlords. Careful review and clear regulations help avoid conflicts and ensure the rental relationship is successful.
Important Note: The content of this article has been prepared to the best of our knowledge and belief. However, due to the complexity and constant changes in the subject matter, liability and guarantees are excluded.
If you require legal advice, feel free to contact us without obligation at 0221-80187670 or send us an email at info@mth-partner.de.
Lawyers in Cologne provide advice and representation in tenancy law.
