Modern Counsel for Growing Companies
In plain English
A contract giving a business the right to occupy property for permitted business purposes in exchange for rent and other obligations. It allocates responsibilities such as repairs, operating expenses, insurance, use, and default remedies. Many protections that apply to residential tenants do not apply in the same way to commercial leases.
Types and key distinctions
Permitted Use
The activities a tenant is authorized to conduct under a lease. This provision may be narrower than the tenant's overall business and is separate from zoning, licensing, or occupancy approval. A lease should address whether the intended operation is allowed and who bears the risk if approvals cannot be obtained.
Tenant Improvements
Changes or build-out work made to leased premises for the tenant's business needs. A lease or work letter should allocate costs, allowances, approvals, ownership, delays, and removal or restoration duties. A landlord's contribution to construction costs does not necessarily cover overruns or postpone the tenant's rent obligation.