The key commercial terms of the leasing in commercial real estate business are rent, rent adjustments, other occupational costs, a period of occupation, remaining in occupation, disposing of the premises, alterations and repair of the premises. The rental payments of the lease of the property are normally paid monthly in advance and the amount of rent is calculated by annual per square foot based on the prevailing market price. The rent includes estimated occupancy, property tax and operating costs. Often, the retail leases include an additional rent percentage based on the gross sales of the tenant from the premises. Take the assistance of Forum commercial real estate for settling all the terms in leasing in the commercial real estate of your properties.
In the initial term of leasing, the rent is fixed at a single price or settled through an adjustment regularly as decided according to an amount per square foot with a change of amount in regular intervals. Generally, least preference is given to the periodical adjustment of rent. In the periodical adjustment of rent the amount of rent, may be subject to change in the initial term.
There are other occupational costs involved in the leasing. They include property taxes, repair and maintenances, utility costs, building insurance and management cost. The tenant is supposed to pay all these other costs along with any emerging costs if it comes under the jurisdiction of the lease.
The period of occupation depends exclusively on the landlord and tenant. Normally, it starts from 5 to 10 years but can vary from case to case of a lease. However, in most cases, the tenants keep the option open for renewal, but it also varies in the cases of provinces and territories. In Quebec, the lease does not permit the right to tenants for renewal. But, in most cases, the tenants manage to negotiate for a unilateral renewal of the lease for an additional one or two terms of 5 years or more. In some cases, the tenant gets penalised if the term expires but the premises are under the possession of the tenant.
In the cases of disposition, the tenant must get the consent of the landlord for a disposition. It all depends upon the relation between the landlord and the tenant on the matter of the consent for disposition.
Similarly, the alternation requirement of the premises by the tenant must get the consent of the landlord. In the cases of repair and maintenance, the tenant is supposed to be responsible for the entire maintenance and management costs but sometimes with the consent of the landlord.