Washington Commercial Lease Agreement Template
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A Washington Commercial Lease Agreement is fundamentally a reciprocal pact between you and your landlord. This accord grants you the privilege to utilize a property for your trade activities, for a mutually agreed duration and rate. It's customized to relate to the specific operations your venture plans to execute on the premises. Before signing on the proverbial dotted line, ensure you understand every section of it.
What are the related laws for Commercial Lease Agreements in Washington?
Title 62A, Chapter 2A of the Revised Code of Washington pertains particularly to leases. This chapter encompasses diverse processes, terminologies, and regulations that steer the development, modification, execution, and violation of lease contracts.
As outlined in some portions of the chapter:
- Section 62A.2A-103 specifies definitions, enumerating assorted phrases connected to lease contracts and their corresponding definitions.
- Section 62A.2A-219 manages the risk of loss circumstances, detailing when and under which conditions the risk of loss from commodities transpires.
- Section 62A.2A-506 affixes the statute of limitations in addressing lease contract matters. It provides the parties with the option to diminish the limitations duration to a bottommost limit of one year.
Laws — Title 62A, Chapter 2A: Washington Uniform Commercial Code
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How to write a Commercial Lease Agreement
As an entrepreneur, you may find the intricate legal language intimidating. But with a defined path and proper guidance, you can decisively draft your lease agreement. Let's delve into the nuts and bolts of a commercial lease agreement, and how to mold it to fit your requirements - think of this as your easy-going, unambiguous guide to journeying through the realm of commercial leases.
1. Permitted Uses
The "Allowed Uses" provision informs you about the application of the leased asset. It distinctly delineates the permissible functions. These can involve manufacturing activities, administrative tasks, warehousing, dispatching, as well as producing and circulating goods.
It's vital to precisely note down all your planned commercial operations in this section. Such lucidity aids in evading prospective legal hitches and secures the effective distribution of resources. Incorporate every single facet to sidestep unexpected events down the line. This grasp helps to maintain the steady progression of your enterprise.
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 possible elongations. It initiates on the Commencement Date and concludes on the Termination Date. There's an option to prolong it for two more biennial periods under identical terms, though the rent may augment. To extend, submit written notice to the landlord 30 days before the term ceases.
(b) The word "Term" signifies both your original lease period and any extensions that follow.
Explicit lease terms are indispensable for corporate strategizing and functions, as well as for potential 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 crystallizes who's responsible for repairing. It encompasses both internal and external matters, such as defective piping or impaired masonry. The expenditure is borne by the landlord, not you.
If a repair isn't attended to promptly, you can arrange for the corrective work and deduct it from your rental payment. Always chronicle these episodes for retrospective reference. This clause is key, as it delineates repair obligations 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" delineates your privileges to adjust the leased area. Minor changes can be made without the landlord's approval, but substantial modifications become the property of the landlord. Removing personal items like shelves or equipment is permissible, provided it does not inflict harm upon the premises. Comprehending this provision aids in averting disagreements and assists you in strategizing 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 "Insurance" provision shelters both the lessee and the lessor. As the lessee, you're required to have property and liability insurance, appointing the lessor as an added insured entity. The lessor manages insurance for impairments to the premises.
'Surrenders of subrogation' halt insurance providers from seeking compensation from the counterpart post a loss. Your insurance carrier should alert the lessor 30 days prior to termination. Getting to grips with these stipulations fortifies your business's financial stability.
(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 "Instances of Default" provision outlines activities deemed as infractions of your lease agreement. Common occurrences encompass omitting rental fees, encountering financial distress, or neglecting adherence to lease stipulations. Stay mindful of this portion and steer clear of these snags to uphold a positive rapport with your landlord and effectively 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 "Holdover" provision addresses circumstances in which you exceed your lease duration. If you fail to vacate by the completion of your lease term, you'll be liable for 125% of the standard rent for each month of holdover. Ensure you comprehend the consequences of overstaying and strategize your departure plan 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?
Upon the expiration of a commercial lease contract, multiple outcomes could transpire. I discovered valuable guides outlining possible outcomes:
- Extend or Cease: Business lessees should make a call on whether to extend or cease the lease arrangement a considerable duration prior to its culmination. Setting the wheel in motion 6 to 12 months beforehand is deemed best practice.
- Shift to Month-to-Month: In the absence of original lease extension or a fresh lease seal, the lessee might transition into a month-to-month tenancy, contingent upon the lessor's concurrence.
- Lessor Assumes Tenancy: Occasionally, when a commercial lease concludes, the lessor may opt to inhabit the property themselves, be it for dwelling or commercial objectives.
- Probability of Legal Intervention: Should issues surface toward the lease end, for instance, if a lessee repeatedly lags on rental payments or neglects to comply with lease conditions, the end of a lease might escalate to legal proceedings.
What are the penalties for breaking Commercial Lease Agreements?
Absolutely, repercussions for violating a commercial lease contract can differ, but typically a number of standard penalties exist:
- Unpaid Rent: Quite often a primary penalty for breaking a commercial lease is that the lessee is found accountable for the outstanding rent due in line with the lease term, even post abandoning the property.
- Notice Duration: The majority of commercial lessors command a notice duration spanning between 30, 60, to 90 days when the lessee opts to breach the lease.
- Cancellation Fees and Extra Charges: Contingent on what is stipulated in the lease contract, commercial leases may apply cancellation charges, along with holding the lessee liable for any promotional expenses incurred for attracting a fresh lessee and possible cleaning expenses.
- Judicial Repercussions: Based on the particulars and the nature of the infringement, if dispute resolution procedures within the lease have exhausted, the debacle may precipitate legal proceedings or result in a court dispute.
Given that the specifics of penalties may deviate contingent on the lease agreement, it's vital to meticulously study the lease agreement to comprehend the precise terms and conditions involved in premature termination.