How Are Expenses Addressed in a Commercial Lease?

In many cases, businesses will need to lease space where they can conduct their operations. As a business addresses issues related to commercial real estate, owners or partners will not only need to find the right location and ensure that it will meet their needs, but they will need to create a commercial lease agreement with the property owner. When negotiating a commercial lease, landlords and tenants need to be sure to understand how various expenses related to the property will be handled.

Landlord and Tenant Responsibilities for Expenses

A commercial lease agreement needs to be clear about whether the landlord or the tenant will be required to pay different expenses. The types of expenses that may need to be addressed include:

  • Property taxes – These are taxes that are assessed on the commercial property itself. In a net lease, these taxes will typically be paid by the tenant.

  • Insurance – To ensure that commercial property is protected from damages, an insurance policy will usually be required. In a double net or triple net lease, the tenant will be responsible for paying insurance premiums, although there are some commercial leases where insurance is the responsibility of the landlord.

  • Common area maintenance – In commercial complexes, there will often be common areas that are shared by all of the businesses. The cost of maintaining these areas (such as landscaping, parking lot upkeep, and security) may be the responsibility of the tenant in a triple net lease, but some leases require the landlord to cover these costs. A lease may include provisions that limit the amount that a tenant is required to pay toward these expenses, and it may also limit the amount that a landlord can increase these expenses from year to year.

  • Utilities – These costs include water, electricity, gas, trash removal, and other services that may be necessary to maintain the property. While a tenant will generally be responsible for paying these expenses, some leases may require the landlord to cover some or all utilities.

  • Improvements – A lease should specify whether the tenant is allowed to make improvements to the property, such as building new structures, modifying the layout of a building, or installing new fixtures. In some cases, a lease may provide a tenant with an improvement allowance, and the landlord may cover some of the costs of improvements.

Contact Our South Side of Chicago Commercial Lease Attorney

It is important for both landlords and tenants to fully understand their rights and responsibilities under a commercial lease agreement. By planning for how different types of expenses will be handled, landlords and tenants can avoid disputes and ensure that there are no unexpected costs in the future. The terms of a commercial lease can have a significant impact on the financial health of a business, so it is important to seek the advice of an experienced Evergreen Park commercial real estate lawyer before signing any leases. At The Marques Eason Law Group, we represent landlords and tenants as they negotiate commercial lease agreements and we also assist with other types of commercial transactions. To get legal help with any issues related to commercial real estate, contact us today at 773-973-3755 and schedule a consultation.


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