Commercial leases are largely unregulated. Parties generally are free to negotiate terms
without any legislative interference or rules.
However, commercial leases share a great deal in common with residential leases as the
have a common history. They must be for a term certain and grant exclusive right of quiet
Basic requirements of a commercial lease
• Identification of parties
• Description of premises
• Time period of the lease (i.e. fixed term or revolving. It is substantially more
common for commercial leases to be for fixed term periods and to be for lengthier
periods than residential leases. Commercial tenants generally want to security of
having a longer time period guaranteed for their commercial premises.)
• Rental Payment. For commercial leases rental can be a fixed amount per month
for more simple leases. More commonly, rent is based on the square footage of
the premises but can also be based on sales.
• Alterations permitted by the tenant. Remember that under the common law no
tenant may make changes to the land or premises without permission. In
commercial leases the tenant frequently needs to alter the premises to maker them
suitable for his trade or business needs, so this is a common term in the lease.
• What will happen to alternations or improvements after the tenant leaves.
Generally, any improvements or alterations to premises that amount to fixtures
ought to belong to the landlord. A fixture is an item of property that has become
affixed to real property to the extent that it is now part of the real property. The
tests for determining whether or not something is a fixture are tests that measure
the extent of the fixation and the purpose of the fixation. Items such as light
fixtures and plumbing become part of the land itself as they have a high degree of
fixation and removal of them would cause da