A Complete Guide to Your Commercial Lease Agreement

Table of Contents

Your Commercial Lease Agreement: A Tenant’s Guide

Businesses face enough uncertainty in today’s world, so savvy operators eliminate it whenever possible. Signing a lease agreement is one way to do that when renting a home or commercial property. This document outlines your rights and responsibilities as a tenant while providing legal protection against unforeseen circumstances, so the details it contains can significantly affect your profit margin. 

A lease agreement is a document explaining all the rules and regulations you and your landlord must follow as you rent a property. The exact content varies because inclusions and omissions are part of the negotiation between the two parties. 

Both the tenant and the landlord must sign the document, and it remains in effect for a predetermined time, at which point you can renegotiate it or move your business from the premises. Many lease documents feature in-depth provisions, so it’s vital that you carefully go over your agreement before signing it.

Your lease will include various rules, dates, and fees associated with your rental property, so you’ll want to make sure you have all the essential information and understand the content. This guide will take you through the importance of your lease agreement and touch on some information every version should include.

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Why Lease Agreements Are Important for Tenants

It’s possible to rent a residential or commercial property without a written lease, but it isn’t recommended. These legal documents offer additional layers of protection and ensure your business doesn’t end up without an office or retail space unexpectedly because a landlord finds a better deal. Your lease also:

Identifies the Parties

Your lease agreement should start by clearly identifying the landlord and tenant. You might include your name and your company’s name on the lease, depending on the makeup of your organization, and the agreement should also identify the landlord or landlord’s agent.

Provides Information on the Property 

Your lease should also present explicit information about the property, including its address. Adding a description of the building into the lease can also be beneficial. 

Includes Costs and Important Dates 

This document should include information on how much your leased building costs every month and when the agreement expires. These inclusions ensure you have protection against illegal rent increases and evictions throughout your rental agreement. Make sure you also understand your expenses and know your responsibilities at the end of the lease.

Having all this information in writing on a signed document can protect your organization from the unforeseen when changing locations. The more data your agreement includes, however, the harder it can become to go through all of it to understand what it means.

7 Clauses Your Lease Agreement Should Include

Many landlords have standard lease agreements they present to all their tenants. These documents generally cover all the essentials, but you’ll still want to ensure that you address specific topics to keep your company protected while renting the space. Your business might include written provisions on:

1. Additional Fees 

There could be more fees than the actual rent amount, so you’ll want to be aware of them. You could be on the hook for maintenance, utility, and repair fees, and some landlords will penalize you if the rent is late. Having these fees in writing before you sign any documents helps you better understand your actual costs.

2. Security Deposits 

You’ll likely be responsible for a damage deposit before moving into the building. You should have information on its amount, the date the landlord collected it, the bank where the deposit is held, and the interest rate. You’ll also want a list of reasons why the landlord can keep the deposit and the procedures for returning it.

3. Your Obligations 

What are your obligations as a tenant? Some lessees are responsible for basic maintenance or repairs, and you might have to address any hazards on the property as well. Other responsibilities could include hiring any on-site security or contractors the property requires during your tenancy.

4. Rules on Parking 

Defining where your employees and clients can park is an essential part of any lease agreement. You’ll want to know the location of your office’s parking spots and whether you’ll have to pay for these spaces. Information on parking passes and parking lot maintenance is also important.

5. Potential Sublets 

There are situations where subletting part of your commercial building becomes necessary when you aren’t using the entire space or choose to downsize. Will your landlord allow this? Your lease agreement should include clear language on the possibility of sublets, including an overview of the tenant’s rights and responsibilities if it occurs. 

6. Renovation Rules 

Renovating or redesigning the interior of a commercial property is often a critical issue for tenants. You’ll want to cover these rules in your lease agreement, including information on how much you’re permitted to change and the condition you must leave the property in when moving out.

7. Information on Breaking the Lease 

You could eventually run into a situation where you have no choice but to break your lease. Your lease agreement should include information on the protocols you’ll have to follow, including any penalties you’re responsible for paying.

Remember to add any of these clauses you feel are important before signing a lease agreement. You might need to negotiate with your landlord to ensure you have these protections, but it’ll be well worth the effort because of the safety it provides for your business. 

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Get the Assistance You Need for Your Next Real Estate Deal

Having a real estate pro on your side can make all the difference in your next deal. Nomadic Real Estate is the expert in D.C. real estate and property management. 
We can help you find your next property or provide experienced management for properties you already own. Contact one of our experts to learn more about property management through Nomadic.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

Owner Portal Reports
  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

Enhanced Rent Roll Report
  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

Unit Comparison Report
  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

Income Statement by Month Report
  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

Owner Portal Documents
  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

Owner Portal Property Statement

You'll also find a month-over-month operating statement:

Month over Month Statement

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

Commincation Dashboard Screenshot
  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Owner Portal New Message Screenshot

Responses will show up in the conversation ticket:

Portal Conversation Response Screenshot
  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Owner Portal Comment

Each conversation will be logged in its entirety:

Portal Conversation Snapshot

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

Owner Ledger Dates
  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

Ledger Property Column
  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

Owner Ledger Description Column
  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

Owner Ledger Amount Column
  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

Owner Ledger Account Balance Column
  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

PW Portal Filters

View a snapshot of income and expenses on your dashboard:

PW Owner Dashboard View

See every transaction in real-time on your ledger:

Owner Portal Ledger View

Statements and forms will be posted to your documents library:

Owner Portal Document Library

View a suite of real-time financial reports:

Portal Reports View

See a running list of all bills, and drill down for more detail:

Owner Portal Bills View

Under Bill Details, you'll find dates/descriptions/amounts and more:

Portal Bill Details

You can also communicate with your Account Manager through the portal:

Owner Portal Communication Tools

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

Net Distribution

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.