COMMERCIAL LEASE AGREEMENT
(State of Maryland)
[// GUIDANCE: This template is drafted for a Maryland‐situated commercial property. Replace all bracketed placeholders before execution, confirm cross-references, and tailor optional provisions (e.g., arbitration, jury waiver, liability cap) to deal specifics.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Premises; Lease Grant
- Term; Possession; Renewal Options
- Rent and Additional Charges
- Security Deposit
- Use of Premises; Compliance With Law
- Environmental Matters
- Maintenance, Repairs, and Utilities
- Alterations and Improvements
- Assignment and Subletting
- Insurance
- Indemnification; Limitation of Liability
- Default
- Remedies; Commercial Eviction Procedures
- Casualty; Condemnation
- Surrender; Holding Over
- Estoppel Certificates; Subordination; Attornment
- Dispute Resolution
- General Provisions
- Execution Block
1. DOCUMENT HEADER
COMMERCIAL LEASE AGREEMENT (this “Lease”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”), by and between:
• [LANDLORD LEGAL NAME], a [STATE & ENTITY TYPE] (“Landlord”); and
• [TENANT LEGAL NAME], a [STATE & ENTITY TYPE] (“Tenant”).
Landlord leases to Tenant and Tenant leases from Landlord the Premises (defined below) upon the terms and conditions set forth herein and for good and valuable consideration, the receipt and sufficiency of which are acknowledged.
2. DEFINITIONS
For ease of reference, the following capitalized terms are used with the meanings set forth below. Each reference to a Section is a reference to a Section of this Lease unless otherwise indicated.
“Additional Rent” – All amounts (other than Base Rent) payable by Tenant under this Lease, including but not limited to Taxes (§5.4), Operating Expenses (§5.5), late charges (§5.6), and indemnity payments (§13).
“Affiliate” – Any entity controlling, controlled by, or under common control with a party.
“Applicable Law” – All present and future statutes, ordinances, regulations, and orders of any governmental authority having jurisdiction over the Premises, including, without limitation, the Maryland Commercial Law and the Maryland Real Property Article, Titles 8-401 & 8-402 (summary ejectment for commercial premises), and all Environmental Laws.
“Base Rent” – The fixed rent payable under §5.2.
“Building” – The building commonly known as [BUILDING NAME/ADDRESS], within which the Premises are located.
“Business Days” – Monday through Friday, excluding federal and Maryland state holidays.
“Commencement Date” – The earlier of (a) the date Tenant first occupies any portion of the Premises for the Permitted Use or (b) [SPECIFIC DATE].
“Environmental Laws” – All Applicable Laws pertaining to health, safety, or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., and their Maryland counterparts.
“Event of Default” – Any of the events listed in §14.1.
“Force Majeure” – An event beyond the reasonable control of the affected party, as more fully defined in §20.10.
“Lease Year” – Each consecutive 12-month period beginning on the Commencement Date (or anniversary thereof).
“Operating Expenses” – All costs incurred by Landlord for operating, maintaining, repairing, and managing the Building and Common Areas, as set forth in §5.5.
“Permitted Use” – [DESCRIBE PERMITTED BUSINESS ACTIVITY].
“Premises” – Approximately [NUMBER] rentable square feet located on the [FLOOR] of the Building, as depicted on Exhibit A.
“Renewal Term” – Any period for which the Lease is extended pursuant to §4.3.
“Tenant Delay” – Any delay to substantial completion of Landlord’s work attributable to Tenant, including changes requested by Tenant or failure to timely supply information.
[// GUIDANCE: Add, delete, or modify defined terms to match transaction specifics.]
3. PREMISES; LEASE GRANT
3.1 Grant of Lease. Subject to the terms of this Lease, Landlord hereby leases the Premises to Tenant, together with the nonexclusive right to use, in common with others, the Building’s common areas (“Common Areas”) for the Permitted Use.
3.2 Condition. Tenant accepts the Premises as-is, except for Landlord’s Work described in Exhibit B (if any). Tenant acknowledges that no representations have been made by Landlord as to the condition of the Premises or Building except as expressly set forth herein.
3.3 Quiet Enjoyment. Provided Tenant pays Rent and performs its obligations, Tenant may peaceably and quietly occupy the Premises without unreasonable interference by Landlord or any person claiming by, through, or under Landlord, subject to the terms of this Lease and Applicable Law.
4. TERM; POSSESSION; RENEWAL OPTIONS
4.1 Term. The initial term (“Initial Term”) shall commence on the Commencement Date and expire at 11:59 p.m. on [EXPIRATION DATE], unless earlier terminated or extended in accordance with this Lease.
4.2 Possession. Landlord shall deliver possession of the Premises to Tenant on the Commencement Date, subject to Force Majeure and Tenant Delay.
4.3 Renewal Options. Tenant shall have [NUMBER] option(s) to renew the Lease for successive periods of [YEARS/MONTHS] each (each, a “Renewal Term”) upon written notice to Landlord given not less than [NOTICE PERIOD] prior to expiration of the then-current Term, on the terms set forth in Exhibit C.
5. RENT AND ADDITIONAL CHARGES
5.1 Rent Payments Generally. Base Rent and Additional Rent are collectively “Rent.” Tenant shall pay Rent without set-off, deduction, or counterclaim in lawful U.S. dollars to Landlord at [PAYMENT ADDRESS] (or by electronic transfer per Landlord’s instructions).
5.2 Base Rent. Base Rent shall be:
Year 1: $[AMOUNT] per annum ($[AMOUNT]/SF), payable in equal monthly installments of $[AMOUNT];
[INSERT ESCALATIONS OR ADD PLACEHOLDER FOR RENT SCHEDULE.]
5.3 Security Deposit. Upon execution, Tenant shall deposit with Landlord the sum of $[AMOUNT] (the “Security Deposit”) to secure Tenant’s performance. The Security Deposit shall be held, applied, and returned in accordance with §6.
5.4 Taxes. Tenant shall pay Tenant’s Pro Rata Share ([PERCENTAGE] %) of all ad valorem real estate taxes, personal property taxes, special assessments, and similar governmental impositions (“Taxes”) attributable to the Building or Premises for each tax year during the Term.
5.5 Operating Expenses. Tenant shall pay Tenant’s Pro Rata Share of Operating Expenses. Operating Expenses exclude (a) principal and interest of mortgage debt, (b) depreciation, and (c) Landlord’s income taxes. A detailed statement and payment mechanics are set forth in Exhibit D.
5.6 Late Charges; Interest. If any Rent is not paid within five (5) Business Days after written notice that it is past due, Tenant shall pay (a) a late charge of five percent (5 %) of the overdue amount plus (b) interest at the lesser of 12 % per annum or the maximum lawful rate from the due date until paid.
6. SECURITY DEPOSIT
6.1 Application; Replenishment. Landlord may apply all or part of the Security Deposit to cure any Event of Default. If Landlord does so, Tenant shall promptly replenish the balance.
6.2 Return. Within forty-five (45) days after the later of (i) Lease termination and (ii) Tenant’s surrender of the Premises in the required condition, Landlord shall return the unapplied portion of the Security Deposit without interest.
[// GUIDANCE: Maryland does not require interest on security deposits for commercial leases, but parties may negotiate.]
7. USE OF PREMISES; COMPLIANCE WITH LAW
7.1 Permitted Use. Tenant shall use the Premises solely for the Permitted Use and for no other purpose without Landlord’s prior written consent.
7.2 Legal and Regulatory Compliance. Tenant, at its sole cost, shall comply with all Applicable Laws, including Maryland fire and building codes, ADA accessibility (as applicable), and any licenses or permits required for Tenant’s operations.
7.3 Prohibited Activities. Tenant shall not (a) create a nuisance, (b) overload the Building systems, (c) conduct any auction or fire sale, or (d) use the Premises for any offensive, immoral, or hazardous purpose.
8. ENVIRONMENTAL MATTERS
8.1 Hazardous Materials. Tenant shall not use, generate, store, or dispose of any Hazardous Material (defined below) on or about the Premises except customary office/retail quantities kept and used in compliance with all Environmental Laws.
8.2 Definition. “Hazardous Material” means any substance that is regulated, listed, or defined as hazardous, toxic, or dangerous under any Environmental Law, including petroleum and asbestos.
8.3 Tenant Obligations. Tenant shall:
(a) comply with all Environmental Laws affecting the Premises or Tenant’s operations;
(b) promptly deliver to Landlord copies of all notices received from any governmental agency relating to Hazardous Materials; and
(c) promptly remediate any environmental condition caused by Tenant.
8.4 Environmental Indemnity. Tenant shall indemnify, defend, and hold Landlord harmless from any claim, cost, or liability (including reasonable attorneys’ fees) arising out of Tenant’s use, generation, storage, or release of Hazardous Materials on or about the Premises.
8.5 Landlord Access for Environmental Inspection. Landlord may enter the Premises upon reasonable notice to conduct environmental inspections or testing, at Landlord’s cost unless contamination is found for which Tenant is responsible.
9. MAINTENANCE, REPAIRS, AND UTILITIES
9.1 Tenant’s Obligations. Tenant shall, at its sole expense, keep the Premises, including all interior, non-structural elements, in good order and repair.
9.2 Landlord’s Obligations. Landlord shall maintain, repair, and replace the Building’s roof, structure, and systems, and the Common Areas, amortizing capital expenditures over their useful life as Operating Expenses where permitted.
9.3 Utilities. Tenant shall directly contract and pay for all utilities serving the Premises or pay Landlord for any utilities that are centrally supplied and metered by Landlord as part of Operating Expenses.
10. ALTERATIONS AND IMPROVEMENTS
10.1 Landlord Consent. Tenant shall not make any alterations, additions, or improvements (“Alterations”) without Landlord’s prior written consent, which shall not be unreasonably withheld for non-structural Alterations.
10.2 Conditions. All Alterations shall (a) comply with Applicable Law, (b) be performed by qualified contractors, (c) not impair structural integrity, and (d) be covered by insurance per §12.
10.3 Ownership. Except for Tenant’s movable trade fixtures, all Alterations become Landlord’s property upon installation without compensation to Tenant; Landlord may require removal and restoration at Tenant’s cost upon Lease expiration.
11. ASSIGNMENT AND SUBLETTING
11.1 Restriction. Tenant shall not assign this Lease or sublet all or any portion of the Premises (each a “Transfer”) without Landlord’s prior written consent, which shall not be unreasonably withheld, conditioned, or delayed.
11.2 Recapture Option. Landlord may, within fifteen (15) days after receiving Tenant’s Transfer request, elect to recapture the Premises (or portion thereof) effective as of the proposed Transfer date.
11.3 Permitted Transfers. Tenant may Transfer to (a) an Affiliate, (b) a successor entity by merger or consolidation, or (c) a purchaser of all or substantially all of Tenant’s assets, provided Tenant gives Landlord not less than fifteen (15) days’ prior notice and the transferee assumes, in writing, all Tenant obligations.
11.4 Excess Rent. Fifty percent (50 %) of any “Excess Rent” (consideration payable to Tenant by a transferee in excess of the Rent allocable to the transferred space) shall be payable to Landlord as Additional Rent after deduction of reasonable leasing commissions and alteration costs.
11.5 Continued Liability. No Transfer releases Tenant or any guarantor from primary liability under this Lease unless Landlord expressly so agrees in writing.
[// GUIDANCE: Maryland law imposes no statutory prohibition on commercial Transfers; customize negotiated elements here.]
12. INSURANCE
12.1 Tenant Insurance. Tenant shall maintain throughout the Term:
(a) Commercial general liability insurance with limits of not less than $[1,000,000] per occurrence and $[2,000,000] aggregate;
(b) All-risk property insurance covering Tenant’s property and Alterations at full replacement cost;
(c) Workers’ compensation insurance per Applicable Law;
(d) Business interruption insurance covering at least six (6) months’ Rent.
12.2 Landlord Insurance. Landlord shall maintain property insurance covering the Building (excluding Tenant property) at replacement cost and may carry liability and rent loss insurance.
12.3 Certificates. Each party shall provide the other with certificates of insurance evidencing required coverages and shall name the other party as an additional insured (liability) or loss payee (property) as applicable.
13. INDEMNIFICATION; LIMITATION OF LIABILITY
13.1 Tenant Indemnity. Tenant shall indemnify, defend, and hold Landlord, its Affiliates, and their respective agents harmless from and against any claim, damage, loss, or expense arising from (a) Tenant’s use or occupancy of the Premises or Building, (b) any act or omission of Tenant or its agents, employees, or invitees, or (c) any breach of this Lease by Tenant, except to the extent arising from Landlord’s gross negligence or willful misconduct.
13.2 Landlord Indemnity. Landlord shall indemnify, defend, and hold Tenant and its Affiliates harmless from and against any claim, damage, loss, or expense arising from Landlord’s gross negligence or willful misconduct.
13.3 Limitation of Liability. Except with respect to (i) indemnification obligations under §8.4 and §13.1, (ii) Tenant’s payment of Rent, and (iii) either party’s fraud or willful misconduct, each party’s liability to the other shall be limited to $[CAP AMOUNT] in the aggregate. [// GUIDANCE: Insert “N/A” or remove §13.3 if parties elect no cap.]
14. DEFAULT
14.1 Events of Default. Each of the following constitutes an Event of Default:
(a) Tenant fails to pay any Rent within five (5) Business Days after written notice;
(b) Tenant breaches any non-monetary obligation and fails to cure within thirty (30) days after written notice (or such longer period as reasonably necessary if cure commenced within 30 days and diligently pursued);
(c) Tenant becomes insolvent, makes an assignment for the benefit of creditors, or files (or has filed against it and not dismissed within 60 days) any petition in bankruptcy or reorganization;
(d) Tenant vacates or abandons the Premises for more than thirty (30) consecutive days;
(e) Any material misrepresentation by Tenant to Landlord in connection with this Lease.
14.2 Landlord Default. Landlord shall be in default if Landlord fails to perform any obligation and does not cure within thirty (30) days after notice from Tenant (or such longer period as reasonably required so long as commenced within 30 days and diligently pursued).
15. REMEDIES; COMMERCIAL EVICTION PROCEDURES
15.1 Landlord Remedies. Upon Tenant Event of Default, Landlord may, subject to Applicable Law:
(a) accelerate all Rent for the balance of the Term and declare it immediately due;
(b) terminate Tenant’s right of possession and repossess the Premises through summary ejectment pursuant to Md. Code, Real Prop. §§ 8-401–402;
(c) terminate this Lease;
(d) re-enter and relet the Premises, crediting net proceeds against Tenant’s obligations;
(e) recover attorney fees, court costs, and collection expenses; and
(f) pursue any other remedy available at law or equity.
15.2 Self-Help. If Tenant fails to perform any obligation beyond applicable notice and cure periods, Landlord may perform such obligation on Tenant’s behalf and the cost shall be Additional Rent payable on demand.
15.3 Injunctive Relief. Each party acknowledges that monetary damages may be inadequate and the nondefaulting party is entitled to equitable relief, including injunction or specific performance, to enforce this Lease.
16. CASUALTY; CONDEMNATION
16.1 Casualty. If the Premises are materially damaged by fire or other casualty, Landlord shall notify Tenant within sixty (60) days as to the estimated restoration period. If such period exceeds [180] days from casualty, either party may terminate this Lease on thirty (30) days’ notice.
16.2 Condemnation. If all or a material portion of the Premises is taken by eminent domain, this Lease shall terminate on the taking date. Awards belong to Landlord, but Tenant may seek relocation costs and compensation for its personal property.
17. SURRENDER; HOLDING OVER
17.1 Surrender. Upon Lease expiration or earlier termination, Tenant shall vacate and surrender the Premises broom-clean, free of Tenant’s property and Hazardous Materials, with all building systems in good working order, reasonable wear and tear excepted.
17.2 Holding Over. If Tenant holds over without Landlord’s consent, tenancy shall be month-to-month at 150 % of the Base Rent plus all Additional Rent, subject to all other Lease terms. Nothing herein permits holding over.
18. ESTOPPEL CERTIFICATES; SUBORDINATION; ATTORNMENT
18.1 Estoppel. Within ten (10) Business Days after request, Tenant shall execute and deliver an estoppel certificate affirming Lease status and other customary information.
18.2 Subordination. This Lease is subject and subordinate to any mortgage now or hereafter encumbering the Building, provided the mortgagee executes a commercially reasonable subordination, non-disturbance, and attornment agreement (“SNDA”) in favor of Tenant.
19. DISPUTE RESOLUTION
19.1 Governing Law. This Lease is governed by, and construed in accordance with, the laws of the State of Maryland, without regard to conflicts-of-law rules.
19.2 Forum Selection. Subject to §19.3, the parties submit to exclusive jurisdiction of the state courts located in [COUNTY], Maryland.
19.3 Arbitration (Optional). If the parties elect arbitration by checking the box below, any dispute (other than eviction or injunctive relief) shall be finally resolved by binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules.
[ ] Arbitration Elected [ ] Arbitration Declined
19.4 Jury Waiver (Optional). IF PERMITTED BY APPLICABLE LAW AND ELECTED BELOW, THE PARTIES KNOWINGLY, VOLUNTARILY, AND IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION ARISING OUT OF THIS LEASE.
[ ] Jury Waiver Elected [ ] Jury Waiver Declined
20. GENERAL PROVISIONS
20.1 Notices. All notices must be in writing and delivered by certified mail, commercial courier, or email with confirmation, addressed as set forth below (or as updated by notice).
20.2 Amendment; Waiver. No amendment or waiver binds either party unless in writing signed by both. A waiver of any breach is not a waiver of any other or subsequent breach.
20.3 Successors and Assigns. This Lease binds and benefits the parties and their respective successors and permitted assigns.
20.4 Severability. If any provision is invalid, the remaining provisions remain in effect, and the invalid provision shall be reformed to the minimum extent necessary.
20.5 Entire Agreement. This Lease, together with its Exhibits, constitutes the entire agreement of the parties and supersedes all prior discussions.
20.6 Counterparts; Electronic Signatures. This Lease may be executed in counterparts, each of which is an original, and by electronic or digital signature with the same effect as manual signatures.
20.7 No Partnership. Nothing herein creates a partnership, joint venture, or agency relationship.
20.8 Force Majeure. Neither party is liable for delay or failure to perform caused by Force Majeure, provided the affected party gives prompt notice and resumes performance promptly after cessation.
20.9 Recording. Either party may record a short-form memorandum of this Lease (“Memorandum”) in the land records of [COUNTY], Maryland, at the recording party’s expense.
20.10 Interpretation. Section headings are for convenience only. “Including” means “including without limitation.” The parties acknowledge that each has reviewed and had the opportunity to have counsel review this Lease.
21. EXECUTION BLOCK
IN WITNESS WHEREOF, the parties have executed this Commercial Lease Agreement as of the Effective Date first above written.
LANDLORD:
[LANDLORD LEGAL NAME]
By: ____
Name: ____
Title: _____
Date: _________
TENANT:
[TENANT LEGAL NAME]
By: ____
Name: ____
Title: _____
Date: _________
[// GUIDANCE: Attach exhibits—floor plan, landlord work letter, rent schedule, operating expense definitions, renewal option terms, SNDA form, etc.—to complete the agreement.]
[NOTARY BLOCKS, corporate secretary attestations, and witness lines may be added as required by internal policy or lender instructions; Maryland does not require notarization for enforceability, but may be advisable for recordable Memorandum.]