Customize a New York commercial lease agreement (above) and read further about required disclosures in New York, optional addendums by business type, and what New York landlord tenant laws apply to commercial lease agreements.
Click here to view/download the direct PDF file.
What is a Commercial Lease Agreement?
In the state of New York, a commercial lease agreement is a legal document that is used between a landlord and a tenant who wishes to do business on the premise. The agreement is going to be very similar to an agreement between a landlord and a tenant for residential property, but the specifics of the agreement may have different protections that will make it possible for business to be done in the unit. In this type of agreement, it is not uncommon for a guarantor to be used, especially if the tenant’s credit history is a bit low.
Guarantees and Disclosures
When a lease of this type is written up by the landlord, it is very important that all of the disclosures for the state are included with the paperwork, read by both parties, and fully understood.
Use of Premise
When a lease is written for commercial use, it is important that the purpose of the business is written on the lease as well. This is the first disclosure that should be seen in detail, and it will define the space so that everything that is done on the property is noted. If any other business takes place in the unit, whether it is legal or not, it is a breach of contract. As the landlord, it may be important to keep the use of the unit as restrictive as possible, but the tenant may want a wider explanation to make sure sales are not limited. This also keeps the landlord from being liable in the court of law if zoning regulations or other criteria is not met.
Good Guy Guarantee
This is a guarantee that is designed mainly for small businesses. Because a small business may not have assets that the landlord can go after if the contract is breached, this is a personal guarantee that allows the tenant to vacate the property before the terms of the lease are up if the business fails. Advance notice must be given to the landlord, but if the tenant is a “good guy” and leaves the property, the landlord will not go after the tenant’s personal aspects to get the remaining rent past the date that the property is surrendered back to the landlord. The property will then be able to be rented again instead of going through a lengthy eviction process to get the property back.
Lead Paint Disclaimer
Any property that was built before the year 1978 is required to inform the tenants that it may be an issue on the property that they may need to contend with. Since this could be a hazard to all of the children who visit the property, it is something that the tenant needs to be aware of before they sign the lease.
Food Use Rider
If the tenant’s business is one that serves food or drinks, there are going to be a lot of food service laws that they will need to abide by. Make sure that the laws for the state of New York are included with the lease so that the prospective tenant can read all of them and make sure that they understand it fully. Any violation when it comes to serving food in the state of New York would mean a breach of contract, and it could mean the end of the lease agreement.
Improvements to the Property
In this section, all of the changes and the improvements that need to be done to the property at this point or at any time in the future can be laid out. It will detail the process for getting these changes to the unit approved and whether or not the expenses will be paid for by the landlord. In most rental agreements, the tenant will need to have permission to make any alterations to the property being rented. The landlord may permit an initial build-out period that will allow the tenant to create a commercial space that fits their needs. Typically, this period of time will be done without paying rent, but the cost of the build-out comes out of the tenant’s pockets.
Option to Renew
This is important to include in the information that is given to a tenant so that they know what to expect when the time that the lease was signed for is up. In most cases, the tenant will be permitted to renew their lease with the landlord, but when they renew the lease, the chances of a rent increase is possible. In addition, other fees may be included in the new rental agreement that were included in the original lease.
How to Write a New York Commercial Lease Agreement
At the top of the form that is being created, the first thing that should be seen is the date that the lease is being made effective and the name of both parties. This will include the names and the phone numbers of the tenant and the landlord as well as an address where the parties can be reached. In this section, the property that is being leased should be described and the full address should be provided. This should include the building number and the floor that the unit is located on as well.
Terms of the Lease
In this section, the dates that the lease will be in effect need to be stated, as well as the number of years that the lease is for. In addition, the renewal terms should be in this section so that both parties know what to expect when it becomes time to renew the lease. Typically, the tenant must give the landlord at least a 90-day notice if they plan to renew the terms of the lease.
Also, the annual rent that is due for the unit must be stated here, and the amount that is due each month. Details about the date that the rental payment is due and the security deposit that is being requested to be held in case of damage should also be in this section.
This section will also need to state the hours that the business will be operating and the time when the tenant is most likely to be on the premise. This will help the landlord know when the best time to contact the tenant is so that they are not disrupting business while customers could be in the unit.
Repairs, Alterations, Improvements
This type of work may be required while the tenant is in the property, but as long as the tenant has the landlord’s consent to do the work, there should be no issues making the repairs and improvements. Some landlords may even cover the cost of the upgrades or allow them to be used to reduce the cost of the monthly rent that is due. Any detail about this type of work that the tenant will need to know will need to be stated in this section.
Utilities and Expenses
Typically, the landlord will cover the cost of the property taxes and the insurance for the building, but the tenant will be required to pay for the utilities. This will include the water, the gas, the electric, the sewage, and the phone. If the landlord covers any of these utilities, it must be expressed and agreed upon in this section of the lease agreement.
Parking is something that most tenants are going to be concerned about; that is, of course, unless the building that they are renting is located in New York City. This section can specify the number of spaces that they will need for the business, and it will also give the landlord the option to charge rent for the use of the spaces. This amount will be added onto the monthly rent, and it will be due on the first of each month.
Additional Information to be Included
- The condition of the premise and any work that the landlord must do before the lease begins.
- The rules that must be followed in the common areas of the building.
- Whether assigning and subletting the unit is permitted.
- The penalty that must be paid for late rent by the tenant and the date that the fee is added.
- Any additional terms of the lease, which can include any restrictions and city municipal codes that must be followed.
When everything else in the document has been read and agreed upon, both of the parties must sign and date the agreement at the bottom. There should also be an area where the name of the parties can be printed. If a guarantor is required for the rental, they will be required to place their information and signature in this section as well. Typically, they will need to provide their name, address, social security number, the date, and their signature.
New York Commercial Landlord/ Tenant Law
- If a building was constructed before 1978, the owner of the property will need to disclose that information to the new tenant. Lead-based paint could be in the walls of the establishment, and because of this, it could be dangerous to the health of those that work there for long periods of time.
- In New York, there is a good guy guarantee that is designed for smaller businesses. This will allow the tenant to vacate the property before the lease expires if their business fails. The landlord must be given a notice that the tenant plans to vacate, but the landlord will not take the tenant to court for any unpaid rent or expenses.
- When a tenant has a commercial space in the state, they are likely going to need parking space for their employees and their customers. If the landlord can provide parking for the tenant, then it should be covered in the rental agreement.
- Depending on the type of commercial agreement that is signed, there will be other expenses for the unit that the tenant will need to pay. This can include utilities, taxes, insurance, and more, so make sure that each aspect is covered in the rental agreement document.