Georgia Commercial Lease Agreement Template
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A Georgia Commercial Lease Agreement primarily functions as a reciprocal contract between you and your property owner. This accord grants you permission to utilize a premises for your entrepreneurial endeavors, for a predetermined duration and cost. It's customized to the distinct operations your venture plans to execute on site. Ensure you grasp every aspect of it prior to affixing your signature.
What are the related laws for Commercial Lease Agreements in Georgia?
The Commercial Code encompassing Title 11, Article 2A of the Georgia Constitutions explicitly addresses leases. This incorporates numerous practices, terminologies, and provisos that guide the creation, alteration, execution, and abrogation of lease contracts.
As depicted in several sections of the article:
- Section 11-2A-103 elucidates definitions, itemizing a multitude of terms pertinent to lease contracts and their corresponding definitions.
- Section 11-2A-219 tackles scenarios of risk of loss, illustrating when and under what conditions the risk of loss from goods transpires.
- Section 11-2A-506 establishes a statute of limitations in adjudicating lease contract quarrels. It indicates that the parties can curtail the limitations period to a bare minimum of one year.
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How to write a Commercial Lease Agreement
As an entrepreneur, you may find the intricate legal terms a bit perplexing. But, armed with a solid plan and the correct advice, you can adeptly formulate your lease agreement. Let's delve into the fundamentals of a commercial lease agreement, and how to shape it to accommodate your requirements - think of this as your warm, down-to-earth handbook for traversing the realm of commercial leases.
1. Permitted Uses
The "Authorized Uses" section guides you on the proper use of the rented premises. It lucidly stipulates the sanctioned activities. These encompass industrial operations, administrative tasks, storing items, disbursement, as well as production and distribution of goods.
It's vital to precisely catalog all your planned commercial pursuits here. This clarity safeguards against potential legal hiccups and guarantees effective deployment of resources. Infuse every nicety to keep future shocks at bay. This comprehension maintains your enterprise's course.
Industrial and light manufacturing, warehousing, office, distribution, and assembly, including designing, manufacturing and distributing branded merchandise and promotional products, including all activities incident or ancillary thereto and all other lawful uses and purposes.
2. Term and Option to Extend
(a) This refers to the duration of the lease and renewals. It commences on the Commencement Date and concludes on the Termination Date. Per the same terms, you have the option of elongating it for two additional biennial periods, although the rent may escalate. Inform the property owner via a written notice 30 days prior to the end of the term, should you wish to prolong it.
(b) "Term" applies to both your primary lease period and any subsequent extensions.
Distinct lease terms are indispensable for strategizing business and operations, as well as scoping out potential elongations.
(a) The initial term of this Lease will commence on the Effective Date and expire on the Expiration Date. The Tenant may extend the Term of this Lease for [two] additional [two]-year extension term(s), on all the same terms and conditions (except for Rent, which will increase during extension Terms as provided below) contained in this Lease, by notifying the Landlord in writing of the Tenant’s election to do so not less than 30 days before the expiration date of the then-current Term, as the case may be.
(b) The initial term and any applicable extension term are referred to in this Lease as the “Term.”
3. Repairs and Maintenance
The "Repairs and Maintenance" provision articulates who carries the responsibility for repairs. It captures both interior and exterior concerns, such as defective pipes or impaired masonry. The expenditure lands on your landlord, not on you.
If a necessary repair is not conducted promptly, you have the right to initiate fixing jobs and deduct the cost from your rent. Always capture these incidents in writing for potential future needs. This provision is paramount, as it outlines repair obligations and shields you from unanticipated financial burdens.
From and after the Effective Date, and for the remainder of the Term, the Landlord shall perform ordinary maintenance and repair of the interior of the improvements on the Premises. In addition, the Landlord shall, at its own cost and expense without reimbursement by the Tenant, keep and maintain in good condition and repair, and make all necessary repairs and replacements to, the exterior walls, building slabs, foundations, structural parts and components, parking lots, gutters, downspouts, roof, roof membrane and coverings and any other part, component or system on the exterior of the Premises. The Landlord shall, at its own cost and expense without reimbursement by the Tenant, keep and maintain in good condition and repair, and make all necessary repairs and replacements to the sprinkler system, mechanical, HVAC, electrical and plumbing systems of the Premises. If the Landlord fails to perform any repair or replacement required to be made by the Landlord in this Lease, and the Landlord fails to cure such failure within 15 days after receipt of a written demand from the Tenant (or immediately, in the case of emergency repairs, including loss of heating and air conditioning), then the Tenant may make such repair or replacement and the Landlord shall reimburse the Tenant for the cost thereof. If the Landlord fails to pay such amount, then the Tenant may offset against the Rent due hereunder the amount so expended.
4. Alterations
"Modifications" outlines your privileges to adapt the leased area. You are permitted to instigate changes without the landlord's approval, but substantive modifications default to the landlord's ownership. Feel at liberty to remove personal belongings such as cabinetry or equipment provided it doesn't inflict damage to the premises. Grasping this clause can circumvent conflicts and aid in efficiently organizing your business arrangement.
The Tenant may, at its own cost and expense and in a good workmanlike manner, make such alterations, additions, or improvements or erect, remove, or alter such partitions, or erect such racks, shelves, bins, machinery, furniture, fixtures, trade fixtures, equipment, and other personal property as it may deem advisable, without the consent of the Landlord. All fixtures and permanent alterations, additions, improvements, and partitions erected by the Tenant will be and remain the property of the Landlord during the Term, and will be abandoned by the Tenant at the expiration of this Lease. All racks, shelves, bins, machinery, furniture, equipment, and other personal property located in the Premises as of the Effective Date or otherwise installed by the Tenant may be removed by the Tenant at any time if the Tenant so elects. All such removals and restoration shall be accomplished so as not to damage the primary structure or structural qualities of the buildings and other improvements situated on the Premises.
5. Insurance
The "Indemnity" provision safeguards both tenant and landlord. As the lessee, you require property and liability insurance, nominating the landlord as a secondary insured. The proprietor insures for damages to the premises.
'Subrogation waivers' prevent insurance providers from recovering from the opposite party following a loss. You should ensure that your insurance company alerts the landlord a month prior to discontinuation. Comprehending these conditions fortifies your business financially.
(a) At all times during the Term, the Tenant shall maintain, at its sole cost and expense, policies of insurance containing the following insurance coverages (which policies shall name the Landlord as an additional insured):
(1) Property insurance with premiums paid in advance insuring the Tenant’s property using the standard Special Causes of Loss Form or equivalent for the full replacement value. The foregoing is referred to in this Lease as “Property Insurance.”
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(2) Commercial general liability insurance with respect to the Premises in amounts not less than $1,000,000 per occurrence, $2,000,000 aggregate limit using current ISO forms or equivalent.
(b) The Landlord shall obtain and keep in force during the Term of this Lease a policy or policies of insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof, as the same may exist from time to time, but in no event less than the total amount required by lenders having liens on the Premises, against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, flood (in the event same is required by a lender having a lien on the Property), and special extended perils ("all risk" as such term is used in the insurance industry). Such insurance must provide for a payment of loss thereunder to the Landlord or to the holder of mortgages or deeds of trust on the Premises.
(c) The policies required by this section must provide for standard waivers of any right of subrogation that the insurer of such party may acquire against the other party to this Lease, for losses that are actually insured against, even if the loss results from a negligent act or omission. The Tenant’s insurance company must provide the Landlord with a certificate of insurance on form ACORD-27 (for Property Insurance required to be carried under this Lease), or its equivalent, and ACORD-25 (for liability insurance required to be carried under this Lease), or its equivalent, which provides that the insurance may not be cancelled without giving the named insured at least 30 days’ prior written notice (or at least ten days’ written notice of cancellation in the event of the non-payment of premium). The Tenant may carry any required insurance under a blanket policy if that policy complies with the requirements of this Lease.
6. Events of Default
The "Occurrences of Default" provision enumerates instances identified as violations of your agreement. Usual occurrences cover neglected rent payments, confronting insolvency, or not meeting lease stipulations2. Stay informed about this segment to avert such setbacks, thereby ensuring a harmonious relationship with your property owner and seamless execution of your venture.
The following events will be deemed to be Events of Default by the Tenant under this Lease:
(1) The Tenant fails to pay any installment of the Rent hereby reserved when due, or any other payment or reimbursement to the Landlord required under this Lease when due, and such failure continues for a period of 30 days after the Tenant’s receipt of written notice of such nonpayment;
(2) The Tenant becomes insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors;
(3) The Tenant files a bankruptcy petition or Tenant is adjudged bankrupt or insolvent in proceedings filed against the Tenant;
(4) A receiver or trustee is appointed for all or substantially all of the assets of the Tenant; and
(5) The Tenant fails to comply with any term, provision, or covenant of this Lease (other than the foregoing in this section 18), and does not cure such failure within 30 days after written notice thereof to the Tenant, or such longer period as may be necessary to cure such default provided the Tenant has promptly commenced curing such default and is diligently proceeding to obtain such cure.
7. Holdover
The "Holdover" provision tackles scenarios where you exceed your lease time. If you don't vacate by the completion of your lease term, you'll be accountable for 125% of the normal rental fee for every month of overstay. It's important to be aware of the financial implications of overstaying, and to devise an appropriate exit plan.
If the Tenant holds over after the expiration of the Term and does not surrender the Premises prior to the expiration of the Term, then for each such month that the Tenant is holding over, the Tenant shall pay to Landlord 125% of the Rent due under this Lease for each month.
What happens when a Commercial Lease Agreement expires?
Upon the expiry of a commercial lease arrangement, various outcomes may transpire. I've discovered some excellent resources that detail the possible scenarios:
- Extend or Conclude: Business lessees should contemplate whether to extend or conclude their contract substantially prior to its termination. Kick-starting this process 6 to 12 months beforehand is deemed an ideal approach.
- Shift to Month-to-Month: If the initial agreement isn't extended or a fresh contract isn't signed, the lessee might have the opportunity to shift into a month-to-month rental, provided the landlord consents.
- Landlord Occupies: Occasionally, when a commercial lease concludes, the landlord might opt to take up residence themselves, either for residential or business objectives.
- Possibility of Legal Proceeding: If complications arise near the completion of a lease, for instance, if a lessee has continually postponed rental payments or neglected to abide by lease stipulations, the termination of a lease might result in a lawsuit.
What are the penalties for breaking Commercial Lease Agreements?
Indeed, the repercussions of prematurely terminating a commercial lease contract can differ, but generally, there are some typical consequences:
- Outstanding Rent: More often than not, one of the key consequences for violating a commercial lease includes the tenant being accountable for the leftover rental expense tied to the lease duration, even after exiting the premises.
- Notice Interval: Many commercial property owners request an advance notice period that ranges from 30, 60, to 90 days when the lessee plans to sever the contract.
- Exit Charges and Extra Expenses: Depending on the specifics stated in the lease agreement, commercial tenancies may impose exit charges and even mandate the lessee to bear any promotional costs that arise in scouting a new tenant, as well as potential costs related to cleaning.
- Legal Implications: Depending on the situation and nature of the breach, if the dispute resolution procedures inscribed in the lease are exhausted, the matter may rise to a legal dispute or end up within the court's purview.
Given that the particulars of the consequences may diverge based on the lease contract, it's key to patiently review the lease document to comprehend the precise terms and conditions tied to early termination.