The Commercial Lease Agreement is an agreement whereby a landlord agrees to let a real property to a business (the tenant) for commercial or business use. The landlord is letting out their property to the tenant who will use it for a period of time in exchange for the rent payment. The tenant is the party using the property of the landlord in exchange for rent.
What distinguishes a commercial lease from a residential lease is the fact that a commercial lease is specifically for tenants who will use the property for business or other commercial use (such as offices, warehouse, or other commercial purpose), while the Residential Lease Agreement is used for residential purposes.
There are different forms of leases under the Nigerian law. The most popular ones are as follows:
- A periodic lease: This is a lease that has a commencement date but no expiration date. The lease continues until it is terminated by either the tenant or the landlord upon the issuance of a written notice. The forms of periodic tenancies are weekly leases, monthly leases, yearly leases, quarterly leases, etc. The weekly tenant pays rent every week, the monthly tenant pays rent every month, the yearly tenant pays the rent every year and the quarterly tenant pays rent every three months until the lease is terminated. Upon termination by the landlord, the landlord must issue the tenant a Notice to Quit and a seven days owner's intention to recover possession. If the tenant intends to terminate the lease, the tenant should issue a Notice of Termination of Lease to the landlord.
- A fixed-term lease: This lease lasts for a specified period as agreed by the parties. In this case, once this period expires, the tenant is required to vacate the premises except the tenant renews the lease. Also, once the period of lease expires, the landlord does not need to issue a notice to quit (except in cases where the lease was terminated by the landlord before the expiration of the term). The landlord is only required to issue a seven days owner's intention to recover possession on the tenant.
How to use this document
In this document, the form filler will provide the following information:
- Particulars of the landlord: This includes the full name and address of the landlord.
- Particulars of the tenant: This includes the full name and address of the tenant.
- Details of the property: The rented property or demised premises is the property the landlord has agreed to let to the tenant for commercial purposes. The form filler must give full description of the property such as the size and the location.
- The rent: This is the amount which is payable by the tenant for the use of the property. Usually if it is a fixed-term lease, the rent is either paid once or in equal installment (i.e weekly, monthly, yearly, etc.). While for a periodic lease, the rent is paid in equal installment (for example, a yearly tenant will pay the rent every year).
- Fixtures and fittings: They are items attached to the property for use by the tenant. These items include car park, office desks, computers, office furniture, air-conditioners, etc. The form filler is required to fill out all the fixtures and fittings, if any.
- Covenants: These are the legal promise made by both parties. This document contains the certain covenants of the landlord, such as covenant to pay ground rent, to ensure the tenant enjoys peaceful possession, deliver the premises in good and habitable condition. Also, the document contains certain covenants of the tenant, such as covenant to pay the rent, to maintain the premises and always keep the premises in good and proper condition, etc.
- Termination: This document includes certain conditions for termination. For example, the length of notice required by the tenant or the landlord in cases where either of them chooses to terminate the lease.
After filling the form, the tenant should go through the agreement and sign two copies of this document. After this, the landlord should also sign the two copies and deliver one copy to the tenant. After the rent is paid, the landlord should issue a Rent Receipt to the tenant as evidence of rent payment.
In Lagos State, the following laws are applicable:
- The Tenancy Law, 2011: The law regulates the right and obligations under tenancy agreements. The law is applicable to all parts of Lagos, except Apapa, Ikeja GRA, Ikoyi and Victoria Island.
- Land Use Charge Law: The land use charge is a property tax and all the properties and property owners are expected to pay it.
Other applicable laws include: Registered Land Law, Land Registration Law, Capital Gains Tax Act and the tenancy laws of various States in Nigeria are applicable to this agreement.
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