The Massachusetts commercial lease agreement allows a tenant, or business, to rent office space, retail stores, and other commercial buildings. This contract establishes the relationship between the landlord and tenant and outlines the terms, conditions, and responsibilities of renting and maintaining the commercial space.
In the state of Massachusetts, a business owner is going to have to get a commercial lease to rent out a location to do business. These are very similar to the type of agreement that a person would make for a residential unit, but there are some allowances that make it a better option for a business to consider. One of the most significant benefits of a commercial lease is that they tend to have a longer time frame than other lease agreements. They are a reliable option that a business owner can choose, and most of the different options that are available to consider will be beneficial to the renter.
Massachusetts Commercial Landlord/Tenant Laws
- When a tenant rents commercial property, the landlord will be responsible for telling them if lead-based paint is on the premises. Any building that was constructed before 1978 could have used lead-based paint, which can be hazardous for pregnant women and small children.
- In this state, all landlords are required to have fire insurance on the property that they own. The terms of the fire insurance must be shared with the tenant within 15 days of signing the lease.
- The bank or the account where the security deposit is being held will need to be disclosed as well. Within 30 days of signing the lease, the tenant must know the amount that was deposited in the account, the account number and the name of the bank where the money is held.
- All of the expenses for the unit must be covered in a commercial lease agreement. This will include who pays the utilities, the taxes, and the insurance on the property. This could either be the landlord or the tenant, and it can change from one property to the next based on the type of commercial lease that is signed.
The commercial leases that can be used in this state include:
- A Triple Net Lease – This is a type of lease that will benefit the landlord a lot because it requires the tenant to take care of the majority of the expenses, which will include the rent payment, the insurance, and the taxes. They will also be responsible for making the repairs that need to be done on their unit, but this also can make a tenant more accountable and ready to own their own space instead of renting it.
- A Gross Lease – This is the type of commercial lease that many tenants prefer because it only requires them to pay the rent that is due each month for the unit. All of the other expenses will be covered by the landlord. Since the landlord will be expected to pay for some of the building’s expenses, the rent that is requested for the tenancy may be a little bit higher with this option.
- A Modified Gross Lease – This is an option that is available for the landlord and the tenant to split the expenses and decide what is going to work best for their specific arrangement. For example, the tenant may be responsible for the rent, the utilities, and the insurance, while the landlord takes care of repairs and pays the taxes on the property. The arrangement that is decided upon needs to be laid out in this document.
- A Percentage Lease – This can be an excellent option for a business that is just starting up. The rent will be low to start, but once the business starts doing well, the tenant will have to provide the landlord with a percentage of the income that is brought in. Most tenants that are just starting their business will like have a lower amount to pay until the business gets up on its feet and starts making a profit.
Massachusetts Commercial Lease Disclosures
With any new rental relationship, the landlord will be required to disclose certain information to the tenant before they move their business into the unit. In the state of Massachusetts, these disclosures include:
Lead-Based Paint Disclosure
This is a federal regulation that requires landlords to tell their new tenants about the possibility of the unit having lead-based paint inside it. This disclosure must be sent to anyone who is renting a space in a building that was built before the year 1978. This type of paint was used in buildings back then, and the existence of it today can be hazardous to small children and anyone who is pregnant.
Fire Insurance Disclosure
In the state of Massachusetts, the landlord will be required to have fire insurance on the property that they are renting out. According to chapter 186, section 21, the terms of the insurance policy must be shared with the tenants who are renting the unit within 15 days of signing the lease and moving into the unit.
Security Deposit Location Disclosure
When a new tenant takes over renting a unit in a commercial area, the landlord is going to need to disclose the location where the security deposit is being held. They will have 30 days to let the tenant know the location of the bank, the account number, and the amount of the deposit.
How to Write a Commercial Lease Agreement
When writing up a commercial lease agreement, the information that is going to be on the document is going to change a bit based on the type of lease agreement that is being considered. Regardless of the type of lease, there are going to be a few pieces of information that need to be included:
Since this is a business arrangement, it is vital that the party information includes the name of the individuals as well as the names of the businesses. This is because the agreement is actually going to be between the management company and the business, so they need to be identified in the document. In addition, make sure that the phone number for each individual is listed in the document as well.
In this section of the document, the full address of the unit will need to be written out as well as adding any identifying information to the document for the property. Make sure that the county is included in the document as well as any cross streets that can help pinpoint where the unit is located.
Terms of the Lease and Expenses
The next section of the document that will need to be addressed in the document will be the actual terms of the lease. This will include the amount of rent that is due each month, the security deposit that the landlord requires, and the renewal process for the tenant to follow when they need to renew the agreement. Make sure to include the utilities that the tenant will need to pay each month as well as any other expenses that will fall on their shoulders. Anything covered by the landlord should be listed in this section as well.
The last portion of the document is where both parties will need to sign and date the agreement. As with most business rental agreements, it is a good idea for the document to be notarized; however, this step is not required in this state.