Important Elements of a Warehouse Lease Agreement

A warehouse lease is a contract between a property owner and a person or business that wants to lease the property for money.  It is a commercial real estate rental agreement because it gives someone the right to conduct business on the leased property.

The lease agreement must be in writing in order to protect the interests of both parties. It should address all the legal rights and responsibilities of the landlord and lessee, and the issues that could be anticipated to occur while the lease is in effect.  A commercial lease agreement should follow a legally approved form and clearly define specific responsibilities and what happens when problems arise like notice is given of a building code violation or rent is paid late.

Include Basic Provisions

The warehouse lease will include basic provisions:

• Term the lease is in force
• Rights of lease renewal
• Use of premises (allowed and unallowable)
• Annual rent amount
• Date rent payment is due each month
• Security deposit due paid upfront
• Who is responsible for property maintenance
• Leasehold improvements and/or allowable construction on the warehouse by renter
• Obligations for meeting state building code requirements
• Insurance requirements
• Who is responsible for paying property or other related taxes
• Who is responsible for paying specific utilities

There are many other terms often included in warehouse leases. They include the right of the landlord to enter the property, abandonment, bailout clauses, and breach of contract to name a few.

Lease Forms

Commercial leases can take several forms. The full service lease requires the tenant to pay an amount in addition to the rent for various services like janitorial and security. The gross lease requires the tenant to rent and sales tax but other property expenses like taxes and insurance are paid by the lessor.

The net lease and percentage lease are more complicated financial arrangements that are normally used in situations where the property is used for retail purposes, but forms of these leases could be applied to warehouse leasing.

Everything is Negotiable So Consult an Attorney

All lease terms are negotiable. A lease can be written to include any terms that the landlord or the tenant wants to negotiate. You should consult an attorney who is familiar with the lease laws and can successfully negotiate on your behalf to insure the final lease is legally acceptable while protecting your rights and limiting liability.