Download Commercial Lease Agreement Template
What is a commercial lease agreement?
A commercial lease agreement is a written contract between a landlord and a tenant. The agreement specifies the terms by which the tenant rents property from the landlord for business purposes.
The commercial lease agreement is also known as a property rental agreement; rental contract; terms of lease; rental terms and conditions; and lease of property agreement.
Consumer Protection Act and commercial lease agreements
Commercial lease agreements in South Africa, where the tenant is a natural- or juristic person with an asset value or annual turnover of less than R2 million per annum, is included under the Consumer Protection Act (CPA) – along with residential lease agreements. When a business’ annual turnover or asset value is more than R2 million, the commercial lease agreement is not covered under the CPA.
Landlords are advised to be aware of the provisions of the Consumer Protection Act 68 of 2008 as it places onerous requirements on “suppliers” with regards to the management of lease agreements for the purposes of protecting “consumers”.
Under the CPA, a lease agreement may not have a fixed period of longer than 2 years. Therefore, commercial lease agreements may no longer be enforceable after two years if the tenant’s asset value and annual turnover are under R2 million.
Tenants are advised to seek legal advice before signing a commercial lease agreement, which is mostly written to favour the landlord. Even if the tenant is unable to negotiate the landlord’s “standard terms,” he/she should be informed about the one-sided provisions of the lease agreement.
What should be included in a commercial lease agreement?
- An accurate description of the location and size of the property.
- A list of defects which the landlord agrees to repair.
- A description of all costs included and excluded from the rental amount.
- The lease period and provisions relating to the renewal of the lease, as well as terms to determine the rent in the renewal period.
- The occupation date criteria which should be met for occupation to occur (i.e. the completion of construction work).
- Details about deposits, suretyships and guarantees.
- Terms in regard of installations and the reinstatement of the property.
- Terms in regard of repairs and maintenance of the property.
- Warranties and exclusion of liability of the landlord.
- A description of the landlord’s termination rights regarding the lease.
- A description of the tenant’s rights regarding changing ownership of the lease.
You can download a commercial lease agreement template for South Africa below.