Mississippi Commercial Lease Agreement Template
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A Mississippi Commercial Lease Agreement is effectively a reciprocal deal between you and your property owner. This compact entitles you to utilize a property for your business endeavors, for a settled span and cost. It's adapted to the specific undertakings your enterprise aims to execute there. Ascertain you comprehend every section of it prior to signing.
What are the related laws for Commercial Lease Agreements in Mississippi?
Title 89, Chapter 7 of the Mississippi Code deals specifically with leases. It encompasses various protocols, definitions, and terms that govern the creation, alteration, fulfillment, and breach of lease contracts.
As highlighted in certain sections of the chapter:
- Section 89-7-15 provides definitions, cataloguing various terms pertinent to lease agreements and their respective interpretations.
- Section 89-7-33 addresses circumstance of loss, detailing under which conditions the risk of loss from goods occurs.
- Section 15-1-49 establishes the timeframe for resolving lease contract disputes. It mentions the parties can truncate the dispute period to a minimum duration of one year.
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How to write a Commercial Lease Agreement
As an entrepreneur, you might find the intricate legal terminology intimidating. Yet, equipped with a unambiguous course and appropriate advice, you can turn to drafting your rental contract with assurance. Let's delve into the fundamentals of a commercial lease agreement, and learn how to modify it to suit your requirements - think of this as your amicable, direct guide to cruising through commercial rent affairs.
1. Permitted Uses
The "Permitted Uses" provision reveals the ways to utilize your rented property. It plainly lays out the permitted activities, such as industrial operations, clerical tasks, storage, distribution, and manufacturing or dispensing goods.
It's vital to precisely itemize all anticipated business functions in this section. Such lucidity mitigates possible legal complications and guarantees effective resource management. Make sure you include all specifics to evade unforeseen circumstances later. By reaching this comprehension, you help secure your enterprise's success.
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 pertains to the lease duration and renewals. It commences on the Start Date and terminates on the End Date. You can renew it for two additional two-year terms under identical constraints, though the rent might escalate. Alert the property owner in written form 30 days prior to the term's conclusion to renew.
(b) "Term" encompasses both your initial lease period and any subsequent extensions.
Well-defined lease duration is pivotal for strategizing business and operations, in addition to potential renewals.
(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" segment spells out who manages fixes. It encompasses both inner and outer troubles, such as malfunctioning pipes or impaired masonry. The expense is the landlord's responsibility, not yours.
Should a repair not be tackled promptly, you have the option to arrange repair services and deduct the cost from your rent. Be sure to always document these occurrences for future records. This part of the agreement is crucial, as it establishes accountability for repairs and safeguards you from unforeseen expenditures.
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" describes your rights to adjust the rented premises. You can undertake variations without landlord approval, but substantial changes become the property of the landlord. Feel at liberty to remove private possessions such as shelving or machinery as long it doesn't impair the property. Comprehending this provision can deter disagreements and assist in efficiently orchestrating 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 "Insurance" provision serves to guard both lessee and property owner. As the lessee, you’ll need to get coverage for both property and liability, designating the property owner as an additional insured. The property owner's duty covers the insurance for impairments to the property.
'Relinquishments of subrogation' prevents insurers from pursuing claims from the opposite party following a loss. Your insurance company should alert the property owner 30 days prior to termination. Grasping these terms acts as an financial safeguard for your business.
(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 "Events of Default" segment enumerates behaviors deemed lease violations. Common incidents involve overlooking rent due dates, encountering financial issues, or not adhering to lease stipulations. Keep a close eye on this portion and sidestep these obstacles to preserve a positive rapport with your landlord and successfully operate your enterprise.
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 "Continuance" provision addresses the circumstance if you extend your stay beyond your lease. If departure doesn't occur at the conclusion of your rental period, you're liable for 125% of the usual rent for each additional month. Ensure you grasp the monetary implications of overstaying and devise an appropriate departure 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 conclusion of a commercial lease arrangement, several outcomes may ensue. I've come across some excellent sources detailing the potential scenarios:
- Renew or Conclude: Prior to lease expiration, entrepreneurial tenants ought to decide whether to extend or wrap up their contract. Embarking on this process 6 to 12 months beforehand is seen as optimal.
- Shift to Month-to-Month: Failing to renew the initial lease or sign a fresh one may result in the tenant transitioning to a month-by-month tenancy, assuming the landlord consents.
- Landlord Assumes Occupancy: Occasionally, post lease termination, the landlord may opt to inhabit the property personally, for dwelling or business objectives.
- Possibility of Legal Proceedings: If problems crop up towards the lease's conclusion, such as a tenant's continual tardiness in rent payments or failure to comply with lease conditions, it might lead to legal proceedings.
What are the penalties for breaking Commercial Lease Agreements?
Certainly, consequences for early termination of a commercial lease agreement can diversify, but usually there are a few typical consequences:
- Leftover Rent: One of the key consequences for ending a commercial lease prematurely is that the tenant may be held accountable for the leftover rent based on the lease term, even after leaving the property.
- Notice Span: A majority of commercial landlords require a notice span typically between 30, 60, to 90 days when the tenant chooses to terminate the lease.
- Severance Charges and Extra Expenses: As per the details outlined in the lease agreement, commercial leases might impose severance charges, plus the tenant might bear any promotional expenses charged for locating a new tenant and any potential cleanup costs.
- Legal Outcomes: Depending upon the situation and extent of the violation, if dispute resolution methods within the lease are depleted, the matter might escalate to legal proceedings or end up in a court dispute.
Because the details of consequences can vary according to the lease agreement, it's essential for you to thoroughly review the lease to understand the specific terms and conditions linked to leaving early.