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Read further to learn more about commercial lease agreements in Alaska, such as what disclosures are required and what else should be included.
What is a Commercial Lease Agreement?
A commercial lease agreement is a legally binding contract between a landlord who owns a commercial property and a tenant who wishes to rent the commercial property with the intention to operate a business. The commercial property being rented generally falls into a retail, office or industrial space category.
In the state of Alaska, landlords may choose to rent commercial spaces to a tenant. Commercial spaces, typically, are units or buildings in which any form of business is to be conducted. Such types of business may include office spaces in which meetings or exams take place, restaurant-style establishments, medical clinics, or shopping boutiques.
A commercial lease agreement is important, in these situations, as certain expectations are to be set for both the individual leasing the property and the individual who will be operating the business on the property. There are several important factors that should be taken into consideration when entering into a commercial lease that both parties should consider prior to signing the said lease.
Factors to consider prior to signing the lease include aspects such as zoning laws for specific types of businesses, as well as inspection of the area to be leased to ensure it meets any specific code laws required for the type of business that will be conducted on the premises (such as food and safety laws required by the state of Alaska.)
Once these aspects have been reviewed and both parties have confirmed that business can safely and legally be conducted on the property in mind, a lease is to be signed. This lease will detail the expectations set out by the landlord in regards to rental payments, the length of the lease, and other important aspects such as any restrictions or disclosures required to lease of the property as provided either by the landlord or the state of Alaska.
Disclosures as Required by Law in Alaska
As per state law, there are several disclosures that must be provided in the commercial lease agreement in order for a unit or premises to legally be leased to a business owner. If these disclosures are not included on the leasing document, it is possible that the lease may be considered invalid and business cannot legally be conducted on the property. Therefore, it is important that the following disclosures are included in the leasing agreement to ensure the operation of business activities can begin on the date as indicated on the lease.
Use of Premises
The first legally required disclosure is the use of premises. While the exact information required in this section is not legally required, this section will detail what the premises can be used for. This is important, as it defines what the space is being rented for, and allows the property manager or landlord to be kept from liability, should the tenant chose to use the space for other activities. This is especially important, as a landlord may be sued for improper leasing or for activities in a specific space that are against specific zoning laws or do not meet other legal requirements.
Option to Renew
This section is required and is important, as it lets the individual who will be leasing the property know the expectations of the lease when the initial leasing period is up, as well as expectations for rent increases, and a timeframe for which the notification of renewal should take place. This section may also provide information in regards to any holdovers and fees which may be accrued in that timeframe.
Undeniably, this is one of the most important sections of the lease. In this section, the landlord will detail the expenses that the tenant will pay, as well as any additional monthly expenses to be paid by the tenant, and any fees that are paid by the landlord. This agreement is often expressed in terms of gross payment – in which the monthly rental fee covers base rent in combination with any associated fees not covered by the landlord, modified gross rent in which the tenant is responsible for the monthly rent, as well as fees not covered by the landlord which are included at a different set price, or triple net expenses. Triple net expenses include operating fees (such as rent, utilities, and any other expenses that may be accrued through means of normal operation) as well as an approximate tax fee for estimated property taxes, and insurance fees, which are required on an as-needed basis by the landlord dependent upon the type of property and operation being run on the premises.
This section identifies changes and improvements that may be made to the property during the leasing period. Furthermore, it details the process for getting permission to make any changes to the facilities provided, as well as what change expenses will be covered by the landlord prior to the leasing start date.
Writing an Alaska Commercial Lease Agreement
Writing a formal commercial lease agreement in the state of Alaska is relatively similar to writing a formal residential lease agreement, at its core. The sections that are to be included are relatively similar in nature to the residential lease agreement. For instance, a description of the property, the terms of the lease – for instance, the date rent is to be paid and the method of payment – and all legal disclosures required, as previously mentioned. Furthermore, restrictions and expectations as put in place by the landlord are included in the leasing document, as well as any information on fees, fines, and expectations of the lease. This basic information is included on most residential leases and should be similarly worded for a commercial leasing document.
At the end of the commercial leasing document, however, it is important to note that a section that allows for proper notarizing of the document should be included. This is a legal requirement in the state of Alaska and provides both parties with a legal obligation to follow the guidelines as set out in the leasing document. Any addendums to the lease itself, unless otherwise specified by the lease document, will require a new notarization to be considered valid. One the document has been completed by both parties and has been notarized, it is considered binding.