Oregon Commercial Lease Agreement Template
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An Oregon Commercial Lease Agreement is fundamentally a reciprocally binding contract between the tenant and the landlord. This accord grants the right to occupy a property for conducting business activities for a predetermined duration and cost. It is customized to the distinct functions your enterprise plans to execute on the premises. Prior to signing, ensure comprehension of all its components.
What are the related laws for Commercial Lease Agreements in Oregon?
Certainly, Chapter 72A, Article 2 of the Oregon Revised Statutes is specifically devoted to leases. This encompasses a plethora of processes, definitions, and provisions that are pertinent to the inception, modification, execution, and violation of leasing agreements.
In detailing some segments of the chapter:
- Section 72A.103 provides definitions, cataloguing a range of terminologies related to lease agreements and their corresponding interpretations.
- Section 72A.219 deals with risk of loss situations, providing details about the circumstances and conditions under which the risk of loss from goods may occur.
- Section 72A.506 stipulates the statute of limitations for addressing lease agreement disputes. The section mentions that parties can curtail the limitation period to a minimum of one year.
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How to write a Commercial Lease Agreement
As an entrepreneur, deciphering intricate legal terminology could be intimidating. Yet, equipped with a lucid outline and the appropriate advice, you can assuredly formulate your leasing contract. Let's delve into the fundamentals of a commercial lease agreement, and how you can adjust it to fit your requirements - think of this as your amiable, simple guide to steering through the realm of commercial leases.
1. Permitted Uses
The "Accepted Uses" provision instructs on how you can utilize the leased space. It distinctly prescribes the permitted operations, spanning from industrial workings, office tasks, storage, dispatching, to the production and supply of goods.
It's vital to precisely articulate all your projected business objectives in this segment. Such transparency aids in mitigating potential legal hiccups and guarantees optimal utilization of resources. Incorporate all aspects to fend off unexpected developments down the line. This comprehension enables your business to maintain its 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 pertains to the lease period and prolongations. It commences on the Inception Date and concludes on the Termination Date. You have the option to lengthen it for an additional two two-year cycles under the identical terms, albeit the rent might escalate. Alert the landlord in written form 30 days prior to the lease’s end to seek an extension.
(b) "Period" encompasses both your primary lease span and any appended extensions.
Transparent lease periods are essential for strategizing business activities and functions, as well as contemplating possible extensions.
(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 "Upkeep and Maintenance" provision outlines who manages restoration tasks. It encompasses both interior and exterior concerns, such as malfunctioning pipes or impaired masonry. The financial burden resides with the landlord, not you.
Suppose a repair isn't resolved promptly. In that case, you're allowed to coordinate the necessary maintenance and deduct its cost from your rent payments. It's crucial to keep records of these occurrences for potential future needs. This segment is indispensable, as it designates accountability for repairs and shelters you from unanticipated costs.
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
The "Modifications" stipulates your permissions to alter the leased premises. Minor alterations can be made without the landlord's assent, but substantial modifications become the property of the landlord. You have the liberty to remove personal possessions such as equipment or shelving, provided it doesn't inflict harm to the property. Grasping this provision can avert disagreements and assist you in planning your business arrangement efficiently.
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 "Coverage" provision secures both the lessee and property owner. As the lessee, you necessitate property and liability insurance, identifying the property owner as a supplementary insured. The property owner handles insurance for any harm to premises.
'Subrogation renunciations' prevent insurance providers from seeking compensation from the counterparty post a loss. Your insurance carrier ought to inform the property owner 30 days ahead of cancellation. Comprehending these terms fortifies your business on a financial front.
(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 "Occurrence of Default" provision enumerates conduct that's deemed as violations of your lease. Common instances involve neglecting rent dues, confronting bankruptcy, or not adhering to lease stipulations. Be cognizant of this part and steer clear of these obstacles to preserve a healthy relationship with your landlord and facilitate the seamless functioning of your business.
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 captures the circumstances when your occupancy surpasses your lease duration. Should you fail to vacate by the culmination of your lease term, you will be subjected to an elevated rate of 125% of normal rent for every additional month of occupancy. Ensure you comprehend the financial implications of an overstay and devise your departure strategy accordingly.
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?
Following the finalization of a commercial lease contract, there could be multiple outcomes. I've discovered some valuable sources describing potential outcomes:
- Extended or Concluded: Commercial lessees should reach a conclusion to either extend or conclude their lease contract substantially prior to its termination. Launching this progression 6 to 12 months prior is perceived as the optimal approach.
- Advance to Incremental Tenancy: Provided there's no extension of the initial lease or agreement upon a new lease, the lessee could possibly shift into a month-to-month tenancy, contingent upon the landlord’s consent.
- Occupancy by Landlord: Occasionally, the property owner may decide to reclaim the venue for their personal residential or commercial use upon the lease's expiration.
- Likelihood of Legal Proceedings: If complications surface around lease termination – say a lessee recurrently postpones rent payments or infringes lease conditions – the lease's end might result in a legal proceeding.
What are the penalties for breaking Commercial Lease Agreements?
Certainly, consequences for reneging on a commercial lease contract can differ, but there are several typical ramifications:
- Residual Rent: A key consequence for prematurely terminating a commercial lease is that the tenant remains accountable for the outstanding rent due for the lease term, even post vacating the venue.
- Notification Duration: A large number of commercial property owners request a notice period of around 30, 60, or 90 days when the tenant opts to abort the lease.
- Ceasing Charges and Supplementary Expenses: In accordance with the lease stipulations, commercial leases may instigate termination charges, while also holding the tenant answerable for any promotional costs incurred for sourcing a new tenant and potential sanitation costs.
- Legal Implications: Subject to the circumstances and nature of the breach, if the dispute resolution avenues within the lease are depleted, the issue might heighten into legal proceedings or result in court litigation.
Given that the specifics of ramifications could range based on the lease agreement, it's paramount to meticulously peruse the lease document to grasp the precise terms and conditions linked to premature termination.