How can you draft a commercial lease agreement that avoids ambiguity and loopholes?

1 Identify the parties and the property

The first step in drafting a commercial lease agreement is to identify the parties and the property involved in the lease. This may seem obvious, but it is important to use the correct legal names and addresses of the landlord and the tenant, and to describe the property accurately and precisely. For example, you should specify the exact location, size, boundaries, and features of the leased premises, and whether it includes any common areas, parking spaces, or amenities. You should also indicate if there are any other parties involved in the lease, such as guarantors, subtenants, or co-tenants, and what their roles and responsibilities are.

2 Define the terms and conditions

The next step in drafting a commercial lease agreement is to define the terms and conditions of the lease, such as the duration, rent, security deposit, maintenance, utilities, insurance, taxes, and other fees. You should also state how and when these terms and conditions can be modified, renewed, terminated, or transferred, and what are the consequences of breach or default. To avoid ambiguity and loopholes, you should use clear and specific language, avoid vague or contradictory clauses, and include examples or calculations where possible. You should also address any contingencies or scenarios that may arise during the lease, such as force majeure, subletting, assignment, alterations, repairs, or disputes, and how they will be resolved.

3 Include warranties and representations

Another step in drafting a commercial lease agreement is to include warranties and representations from both parties, which are statements of fact or promises that affect the validity and enforceability of the lease. For example, the landlord may warrant that the property is in good condition and complies with all applicable laws and regulations, and that they have the authority and consent to lease it. The tenant may represent that they will use the property for a lawful and permitted purpose, and that they have the financial capacity and creditworthiness to pay the rent and other obligations. These warranties and representations should be accurate and truthful, and any material misrepresentation or breach can result in legal action or termination of the lease.

4 Incorporate exhibits and attachments

A final step in drafting a commercial lease agreement is to incorporate exhibits and attachments that supplement or clarify the main body of the lease. These may include diagrams, maps, photos, schedules, inventories, or other documents that provide more details or evidence of the parties' agreement. For example, you may attach a floor plan of the leased premises, a rent schedule that shows the rent amount and due dates, or an inventory of fixtures and equipment that are included or excluded from the lease. These exhibits and attachments should be referenced and numbered in the lease, and signed or initialed by both parties to confirm their acceptance and validity.

5 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?