COMMERCIAL LEASE AGREEMENT

(State of North Carolina)

[// GUIDANCE: This template is drafted for use with commercial/retail/office/industrial property located in North Carolina. It assumes a single-tenant premises, but may be adapted for multi-tenant properties. All bracketed items must be customized before execution.]

TABLE OF CONTENTS

I. Document Header
II. Definitions
III. Operative Provisions
IV. Representations & Warranties
V. Covenants & Restrictions
VI. Default & Remedies
VII. Risk Allocation
VIII. Dispute Resolution
IX. General Provisions
X. Execution Block

I. DOCUMENT HEADER

COMMERCIAL LEASE AGREEMENT (this “Agreement”) 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 and Tenant are sometimes referred to individually as a “Party” and collectively as the “Parties.”

Recitals

A. Landlord is the fee simple owner of the real property commonly known as [PROPERTY NAME], located at [STREET ADDRESS, CITY, COUNTY, NC ZIP], together with all improvements thereon (the “Property”).

B. Landlord desires to lease to Tenant, and Tenant desires to lease from Landlord, a portion of the Property described herein (the “Premises”), upon the terms and conditions set forth below, for valid consideration, the receipt and sufficiency of which are acknowledged.

NOW, THEREFORE, the Parties agree as follows:

II. DEFINITIONS

For purposes of this Agreement, the following capitalized terms shall have the meanings set forth below. Defined terms appear alphabetically for ease of reference.

“Additional Rent” – Any and all monetary obligations of Tenant under this Agreement other than Base Rent, including but not limited to Operating Expenses, Taxes, late fees, and utilities.

“Affiliate” – Any entity controlling, controlled by, or under common control with the referenced Party.

“Base Rent” – The monthly rental amount payable pursuant to Section 3.2.

“Building” – The structure(s) situated on the Property containing the Premises.

“Business Day” – Any day other than Saturday, Sunday, or lawful North Carolina state or federal holidays.

“Commencement Date” – The date set forth in Section 3.1 when the Term begins.

“Environmental Laws” – All present and future federal, state, and local statutes, regulations, and ordinances relating to pollution, protection of human health or the environment, or the regulation of Hazardous Materials, including but not limited to 42 U.S.C. §§ 6901 et seq. (RCRA) and 42 U.S.C. §§ 9601 et seq. (CERCLA), together with the North Carolina statutes codified at N.C. Gen. Stat. § 130A-290 et seq. and § 143-215.1 et seq.

“Event of Default” – Any of the occurrences enumerated in Section 6.1.

“Force Majeure” – An event described in Section 7.4 excusing performance.

“Hazardous Materials” – Any substance defined as hazardous, toxic, or dangerous under any Environmental Law, including petroleum products.

“Lease Year” – Each consecutive twelve (12)-month period beginning on the Commencement Date.

“Operating Expenses” – All costs of operating, maintaining, repairing, and replacing the Property and Building as further defined in Section 3.4.

“Premises” – The rentable area outlined on Exhibit A, consisting of approximately [RSF] rentable square feet (plus the non-exclusive right to use Common Areas).

“Security Deposit” – The monetary security posted by Tenant pursuant to Section 3.6.

“Taxes” – Real property taxes and assessments described in Section 3.5.

“Term” – The period of tenancy specified in Section 3.1, as the same may be extended or earlier terminated.

[// GUIDANCE: Add or delete defined terms to match drafting.]

III. OPERATIVE PROVISIONS

3.1 Term; Commencement

(a) Term. The lease term (the “Initial Term”) shall commence on [COMMENCEMENT DATE] (the “Commencement Date”) and expire at 11:59 p.m. Eastern Time on [EXPIRATION DATE], unless sooner terminated as provided herein.
(b) Renewal Options. Tenant shall have [NUMBER] option(s) to renew the Term for [LENGTH OF EACH OPTION] (each, a “Renewal Term”) on the terms set forth in Exhibit B.

3.2 Base Rent

Tenant shall pay to Landlord base rent (“Base Rent”) in lawful U.S. currency, without offset or deduction, as follows:

Base Rent is due on or before the first (1st) day of each calendar month. Partial months shall be prorated on a per-diem basis.

3.3 Late Charges; Interest

If any payment of Rent is not received within [5] days after due, Tenant shall pay a late charge of [__]% of the overdue amount plus interest accruing at the lesser of (i) [12]% per annum or (ii) the maximum rate permitted under N.C. Gen. Stat. § 24-1.

3.4 Operating Expenses

Tenant shall pay Tenant’s Pro Rata Share of Operating Expenses (defined by formula: RSF of Premises ÷ RSF of Building) within thirty (30) days after Landlord’s invoice, subject to annual reconciliation. Operating Expenses include, but are not limited to, Common Area maintenance, insurance premiums, utilities for Common Areas, management fees (capped at [___]% of gross rents), and capital expenditures amortized over useful life (excluding replacement of structural components unless necessitated by Tenant acts).

3.5 Taxes

Tenant shall pay Tenant’s Pro Rata Share of real property Taxes assessed against the Property for each tax fiscal year. “Taxes” exclude Landlord’s net income taxes and franchise taxes. Tenant may contest Taxes in good faith, provided Tenant (i) gives prior notice to Landlord, (ii) bears all costs, and (iii) indemnifies Landlord.

3.6 Security Deposit

Upon execution, Tenant shall deposit with Landlord $[AMOUNT] (the “Security Deposit”) as security for Tenant’s performance. Landlord may commingle the Security Deposit and may apply it to cure Tenant defaults without waiving remedies. Landlord shall return any unapplied balance within thirty (30) days after expiration of the Term and delivery of possession, subject to N.C. Gen. Stat. § 42-51.

3.7 Use of Premises

(a) Permitted Use. Tenant shall use the Premises solely for [DESCRIBE USE e.g., “general office use”] and for no other purpose without Landlord’s prior written consent.
(b) Compliance. Tenant shall at its sole cost comply with (i) all applicable federal, state, and local laws (including the North Carolina State Building Code), and (ii) all reasonable rules promulgated by Landlord.

3.8 Alterations and Improvements

Tenant shall not make any Alterations to the Premises without Landlord’s prior written approval, except for non-structural Alterations costing less than $[THRESHOLD] in any Lease Year. All Alterations shall: (i) be performed in a good and workmanlike manner; (ii) comply with laws and insurance requirements; and (iii) become Landlord’s property upon installation unless otherwise agreed.

3.9 Maintenance and Repairs

(a) Tenant Responsibilities. Tenant shall, at its sole cost, keep the Premises (excluding structural elements, foundation, and roof) in good order and repair, including HVAC exclusively serving the Premises.
(b) Landlord Responsibilities. Landlord shall maintain structural elements, foundations, exterior walls (excluding interior surfaces), and roof, except to the extent damage is caused by Tenant.

3.10 Utilities

Tenant shall arrange and pay for all utility services to the Premises, including electricity, gas, water, sewer, telecommunications, and janitorial service.

3.11 Environmental Compliance

(a) Tenant shall not cause or permit Hazardous Materials on the Premises except ordinary office/retail supplies in limited quantities compliant with Environmental Laws.
(b) Tenant shall promptly remediate any release of Hazardous Materials caused by Tenant in accordance with Environmental Laws, under Landlord’s supervision.
(c) Landlord represents, to its actual knowledge, that as of the Effective Date no notice of violation of Environmental Laws concerning the Property is outstanding.

3.12 Condition Precedent

Landlord’s obligations are contingent upon receipt of any required lender or governmental approvals. If approvals are not obtained within [45] days after Effective Date, either Party may terminate this Agreement by notice.

IV. REPRESENTATIONS & WARRANTIES

4.1 Mutual Authority

Each Party represents that it (i) is duly formed and validly existing, (ii) has full power and authority to enter into and perform this Agreement, and (iii) has duly authorized the execution hereof.

4.2 Landlord Representations

(a) Title. Landlord holds fee simple title to the Property, free of encumbrances that would materially interfere with Tenant’s use.
(b) Compliance. To Landlord’s knowledge, the Building is in material compliance with applicable laws as of the Effective Date.
(c) No Conflicts. Landlord’s execution of this Agreement violates no contract or court order.

4.3 Tenant Representations

(a) Organization. Tenant is duly organized, in good standing, and qualified to transact business in North Carolina.
(b) No Proceedings. There are no pending bankruptcy or insolvency proceedings affecting Tenant.
(c) OFAC. Tenant is not, and is not owned or controlled by, a person on any OFAC list.

4.4 Survival

The representations and warranties in this Article IV shall survive the Commencement Date for a period of [12] months.

V. COVENANTS & RESTRICTIONS

5.1 Affirmative Covenants of Tenant

(a) Pay Rent timely.
(b) Maintain insurance per Section 7.3.
(c) Promptly provide copies of any notices of violation relating to the Premises.
(d) Deliver estoppel certificates within [15] Business Days of request.

5.2 Negative Covenants of Tenant

(a) No objectionable uses generating excessive noise, odor, or vibration.
(b) No assignment or subletting except per Section 9.1.
(c) No liens may attach to Landlord’s interest; Tenant must discharge any mechanic’s lien within [30] days.

5.3 Landlord Covenants

Landlord shall (i) maintain Common Areas in neat and sanitary condition; (ii) provide building access 24/7, subject to reasonable security procedures; and (iii) perform Landlord maintenance obligations.

VI. DEFAULT & REMEDIES

6.1 Events of Default

The following constitute an “Event of Default”:

1. Monetary Default: Tenant fails to pay Rent within [5] days after written notice.
2. Non-Monetary Default: Tenant breaches any non-monetary covenant and fails to cure within [30] days after written notice (or sooner if life-safety risk).
3. Bankruptcy: Filing or admission of insolvency by Tenant or appointment of trustee not dismissed within [60] days.
4. Abandonment of Premises for [15] consecutive days.

6.2 Landlord Remedies

Upon an Event of Default, Landlord may, subject to N.C. Gen. Stat. § 42-26 et seq.:

a. Terminate this Agreement by written notice and recover possession via summary ejectment before the clerk of court in the county where the Premises are located.
b. Accelerate all Rent due for the remainder of the Term, discounted to present value at [6]%.
c. Enter and relet the Premises at Tenant’s expense; Tenant liable for deficiency.
d. Recover reasonable attorneys’ fees and court costs as provided in N.C. Gen. Stat. § 6-21.2.
e. Exercise any other remedy available at law or in equity.

6.3 Tenant Remedies

If Landlord materially defaults and fails to cure within [30] days (or if cure reasonably requires more time, within a reasonable time after commencement), Tenant may (i) seek specific performance, or (ii) terminate this Agreement upon [10] days’ additional notice.

VII. RISK ALLOCATION

7.1 Indemnification

(a) Tenant Indemnity. Tenant shall indemnify, defend, and hold Landlord, its Affiliates, and their respective directors, officers, members, managers, employees, and agents (collectively, “Landlord Indemnitees”) harmless from any and all claims, liabilities, losses, damages, fines, and costs (including reasonable attorneys’ fees) arising from (i) Tenant’s use or occupancy of the Premises, (ii) the acts or omissions of Tenant or its agents, contractors, employees, or invitees, or (iii) Tenant’s breach of this Agreement, except to the extent caused by the gross negligence or willful misconduct of any Landlord Indemnitee.
(b) Reciprocal Indemnity. Landlord shall indemnify Tenant for bodily injury or property damage to the extent caused by Landlord’s gross negligence or willful misconduct.

7.2 Limitation of Liability

[PLACEHOLDER: Insert negotiated liability cap, e.g., “Neither Party shall be liable for any consequential, special, or punitive damages except in connection with indemnity for third-party claims or a willful breach.”]

7.3 Insurance

Tenant shall maintain, at its sole cost:
1. Commercial General Liability insurance with limits of not less than $[1,000,000] per occurrence and $[2,000,000] aggregate, naming Landlord as additional insured;
2. Property insurance covering Tenant’s personal property and Alterations on an “all-risk” basis at full replacement cost;
3. Workers’ compensation in statutorily required amounts; and
4. Business interruption insurance for at least [6] months of Rent.

Landlord shall maintain property insurance on the Building (excluding Tenant’s property) and public liability insurance in commercially reasonable amounts.

7.4 Force Majeure

Neither Party shall be liable for failure to perform (except payment of Rent) due to strikes, acts of God, shortages of labor or materials, governmental orders, or other events beyond reasonable control, provided the affected Party provides prompt notice and resumes performance as soon as practicable.

VIII. DISPUTE RESOLUTION

8.1 Governing Law

This Agreement and any disputes arising hereunder shall be governed by and construed in accordance with the laws of the State of North Carolina, without regard to its conflicts of law rules.

8.2 Forum Selection

Subject to Section 8.3, the state courts of the county in North Carolina where the Property is located shall have exclusive jurisdiction, and each Party irrevocably submits to such venue.

8.3 Optional Arbitration

[OPTIONAL – include only if selected in deal terms]
At either Party’s written election, any dispute (excluding actions for eviction, injunctive relief, or collection of Rent) shall be resolved by binding arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules. The arbitration shall be conducted in [CITY], NC before a single arbitrator who is a licensed North Carolina attorney with at least ten (10) years’ commercial real estate experience. Judgment on the award may be entered in any court of competent jurisdiction.

8.4 Optional Jury Trial Waiver

[OPTIONAL – include only if selected]
EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ITS RIGHT TO A TRIAL BY JURY IN ANY CIVIL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT.

8.5 Injunctive Relief

Notwithstanding Section 8.3, Landlord may seek immediate injunctive relief (including eviction or restraining orders) in accordance with N.C. Gen. Stat. § 42-25.9 and applicable court rules.

IX. GENERAL PROVISIONS

9.1 Assignment and Subletting

Tenant shall not assign this Agreement or sublet all or any portion of the Premises without Landlord’s prior written consent, which shall not be unreasonably withheld or delayed, provided: (i) Tenant gives Landlord at least [30] days’ prior notice with financials of the proposed transferee, (ii) the transfer is for a bona fide arm’s-length transaction, and (iii) Tenant remains primarily liable. A change of control of Tenant shall constitute an assignment. Landlord shall approve, conditionally approve, or deny consent within [15] Business Days. If Landlord fails to respond, consent is deemed withheld. Any assignment or sublease in violation of this Section is voidable at Landlord’s option.

9.2 Amendments and Waivers

No amendment or waiver shall be effective unless in writing and signed by authorized representatives of both Parties. One Party’s waiver of a breach does not constitute continuing waiver.

9.3 Successors and Assigns

This Agreement shall inure to the benefit of and be binding upon the Parties and their respective permitted successors and assigns.

9.4 Severability

If any provision is adjudged invalid, the remainder shall not be affected, and the invalid provision shall be reformed to effectuate the Parties’ intent to the maximum lawful extent.

9.5 Entire Agreement

This Agreement, together with all exhibits and addenda, constitutes the entire agreement between the Parties, superseding all prior negotiations and understandings.

9.6 Counterparts; Electronic Signatures

This Agreement may be executed in multiple counterparts, each of which shall be deemed an original. Signatures transmitted electronically (e.g., via PDF, DocuSign) shall be deemed original and binding.

9.7 Notices

All notices shall be in writing and deemed given when (i) delivered by hand, (ii) sent by nationally recognized overnight courier, or (iii) deposited in the U.S. Mail, certified, return receipt requested, postage prepaid, addressed to the Party at its Notice Address set forth below (or such other address as either Party may designate by notice).

Landlord Notice Address:
[LANDLORD ADDRESS]

Tenant Notice Address:
[TENANT ADDRESS]

X. EXECUTION BLOCK

IN WITNESS WHEREOF, the Parties have executed this Commercial Lease Agreement as of the Effective Date.

[OPTIONAL NOTARY ACKNOWLEDGMENT PER N.C. G.S. § 10B-3]
[// GUIDANCE: North Carolina does not require notarization of commercial leases unless they exceed a term of three (3) years, in which case the lease must be notarized and recorded to be enforceable against third parties (N.C. Gen. Stat. § 47-18). Include acknowledgment if Term + options may exceed three years and recording is anticipated.]

EXHIBIT A – Premises Floor Plan

EXHIBIT B – Renewal Option Terms

EXHIBIT C – Building Rules & Regulations

[// GUIDANCE: Insert additional exhibits (e.g., Work Letter, Guaranty) as needed.]