Commercial Lease / Lease for Office Premises

What is a Commercial Lease Agreement?

This Commercial Lease Agreement can be used when a commercial property including office spaces, retail stores, warehouses, etc. is being rented from a landlord (or lessor) to a tenant (or lessee). For commercial properties, the Commercial Lease Agreement will provide a quick and easy way to outline all of the terms of the agreement between the parties.

The Commercial Lease Agreement will create a legally binding contract between the parties, outlining the rights and responsibilities of both the landlord and the tenant.

What is the difference between a Commercial Lease Agreement and a Residential Lease Agreement?

A Commercial Lease Agreement is not the same as a Residential Lease Deed. In a Commercial Lease Deed, the tenant is typically a business entity and the property is used for business-related activities such as retail, office work, or manufacturing. The Commercial Lease Deed is quite detailed and outlines the responsibilities of each party involved, including taxes, maintenance, and restrictions. Usually, Commercial Lease Deeds are entered into for longer periods of time. Under the Residential Lease Deed, the property is rented out for living purposes and it often for a shorter period.

Is it mandatory to have a Commercial Lease Agreement?

No, it is not mandatory to have a Commercial Lease Agreement. However, having one will help both parties to have a clear understanding and avoid any disputes in future.

What must a Commercial Lease Agreement contain?

This Commercial Lease Agreement must contain the following clauses:

• Parties involved: names and details of the landlord and tenant.
• Property description: detailed description of the rental property.
• Term of lease: duration of the lease agreement.
• Rent amount: rent payment intervals, due date, etc.
• Payment methods: the method of making the renal payment including cash, online payment, etc.
• Security deposit: the amount of security deposit, method of payment, return terms, etc.
• Maintenance and repair: defines who is responsible for major or minor repairs of the property.
• Utilities: includes the details of utilities included and the tenant's responsibility.
• Use of property: the accepted way of using the property and surrounding facilities.
• Subletting: rules regarding further renting out the property by the tenant.
• Termination: conditions under which the lease can be terminated by either party.
• Renewal options: conditions for renewing the lease at the end of the term.
• Inspection: The landlord's right to inspect the property with notice.

Who can enter into a Commercial Lease Agreement?

Any individuals above the age of 18 years or entities registered in India can enter into a Commercial Lease Agreement.

What can be the duration of a Commercial Lease Agreement?

The duration of the Commercial Lease Agreement varies from a few months to several years. It depends on the nature of each transaction. Often, the Commercial Lease Agreement has a clause for automatic renewal, under which the Commercial Lease Agreement extend to a further period unless terminated by either party in writing.

What must be done once the Commercial Lease Agreement is ready?

The Commercial Lease Agreement would need to be printed on non-judicial stamp paper or e-stamp paper, which is available in certain states. The value of the stamp paper would depend on the state in which it is executed, as well as the duration of the lease and the lease rent. Each state in India has provisions in respect of the amount of stamp duty payable on the lease deed, and the same would need to be determined based on the specific facts of the case. Information regarding the stamp duty payable can be found on the State government websites.

After printing the document on stamp paper or e-stamp paper, as applicable, both parties should sign the lease deed and each party should keep a copy of the lease deed.

Is it necessary to register a Commercial Lease Agreement?

Yes, the Commercial Lease Agreement need to be registered if the period of the lease is more than one year. For registration, both the lessor and lessee have to go to the concerned office of the sub-registrar where the property is located.

Is it necessary to have witnesses for a Commercial Lease Agreement?

Yes, two witnesses over the age of 18 are required to register a Commercial Lease Agreement. Even if registration is not completed, having two witnesses will aid in resolving disputes easily.

Which laws are applicable to Commercial Lease Agreement?

In terms of the Transfer of Property Act, 1882 read with the Registration Act, 1908 all leases for terms of more than one year are compulsorily registrable. However, leases for a duration of one year or less do not need to be registered with the Sub-registrar.

In some states in India, such as Maharashtra, a leave and licence agreement is more commonly used for the lease of commercial premises.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.