A Brief Introduction About the Shopping Center Lease
The shopping center lease –also referred to as the shopping center lease agreement, is a type of agreement that is signed between the landlord of the shopping center and the individual who is leasing out the given space.
The shopping center lease also goes by the name as a private contract. It also states the terms & conditions of the rent along with the duration of the lease that it will aim at covering.
Upon entering the given contract, there could be certain risks at the end of the tenants. The landlord who provides the lease might not be in favor of the tenant. Therefore, a reputed attorney is recommended to review the given contract to look up for any stipulation that might be detrimental to the tenant.
Who Takes the Shopping Center Lease?
The commercial lease agreement sample is known to be signed between the owner or landlord of the commercial space and the individual who would be leasing the given commercial space. The shopping center lease agreement specifies both the duration as well as the rent of the commercial space for lease.
It is quite common that the tenant is known to contribute a specific portion of the total expenses for maintaining the typical areas of the shopping center while paying for a part of the property taxes.
Purpose of the Shopping Center Lease
Of all the official legal documents upon which the development, as well as management of a commercial shopping center, is based, the valid lease between the developer or owner of the shopping center and the operators of the shopping center shops, turns out to be the most vital document.
Store leases are known to create a source of income for rewarding the commercial developer along with the respective mortgage lenders for further investments. The store leases are also known to govern the different types of products that might be sold in the given shopping center along with the particular kinds of services that might be rendered in the given commercial unit. Commercial store leases are also known to provide grounds for specific rules & regulations as far as housekeeping chores of the tenants, and the landlords are concerned.
Contents of the Shopping Center Lease
Once you have understood how do leases work in a typical shopping center scenario, it is important to know about what it should contain at the same time. While availing a shop space for rent or a commercial space for rent, it is important to check into the important clauses of the lease agreement for the best outcomes. Some of the important specifications or clauses that you must look into the given commercial lease agreement are:
- Taxes reimbursement by the tenants along with additional government charges
- Confirming that all of the fine printing of the agreement document is well-read and understood by the involved parties
- Names & contact information of the involved parties
- Length of the lease
- Shopping center lease rates
How to Draft the Shopping Center Lease?
If you are the landlord of a particular shopping center commercial unit, it is important to draft the lease agreement by keeping in mind the interests of both parties. Some of the important considerations you must include in the agreement are:
- The days as well as hours the commercial stores should remain open in the shopping center. In case a particular business tends to have non-conventional operating hours, this must be negotiated within the contract.
- The appropriate conditions for co-tenancy should be provided for protecting the tenants from any decreased revenue in case the anchor tenant considers closing the store. This is also applied to the percentage of businesses that are involved in the given shopping center.
- CAM (Common Area Maintenance) costs should be listed as the costs of the share of the tenants –especially concerning the square footage.
- Exclusivity clauses can also be included in the lease agreement.
While negotiating with the shopping center lease agreement, here are some points to keep in mind:
- Accept the “as is” clause of the agreement without prior inspection
- Ensure that the “use” clause of the agreement is flexible for your interests
- In case you are buying a franchise, make sure that the franchisor is content
- Ensure the provision of a ‘rent-free’ period in the agreement
- Inspect the previous utility bills and taxes of the commercial stores
- Ask the landlord to include the default notice of payment
Benefits & Drawbacks of the Shopping Center Lease
There are several benefits to the shopping center lease. Some points are:
- Increasing the overall revenue stream
- Specifying provisions for the individual responsibilities and liabilities of each party in the contract
- Specifying grounds of violation such that breaching of the agreement does not happen
However, there can be some demerits, as well. Some are:
- The tenant is expected to abide by the rules of the landlord of the property
- Paying taxes can be burdensome for the given period of the lease
- Forced relocation in a shopping center could adversely impact the business
What Happens in Case of Violation?
In a typical shopping center lease agreement, the tenant is mostly known to negotiate with the landlord on the grounds of exclusive covenants. In case some breaching occurs concerning the terms & conditions of the agreement(1), the tenant should be allowed to get out of the agreement’s clause in some way. It is common, for example, for the tenant to either terminate the lease or pay only 50 percent of the total rent.
Shopping center lease documents or agreements are vital when a contract needs to be signed between the landlord of the commercial unit and the respective tenants. Make sure that you have gone through the agreement’s terms properly.