South Carolina Commercial Lease Agreement Template
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A South Carolina Commercial Lease Agreement is fundamentally a reciprocal contract between you and your landlord. This commitment provides the entitlement for you to utilize a property for your business activities, for a mutually agreed duration and cost. It's customized to suit the particular operations your business plans to conduct there. Ensure to grasp every element of it prior to your endorsement.
What are the related laws for Commercial Lease Agreements in South Carolina?
Title 36, Chapter 2A of the Uniform Commercial Code directly tackles leases. It consists of various schemes, terms, and conditions that dictate the creation, alteration, execution, and violation of lease contracts.
Peeking into a few sections of the article:
- Section 36-2A-103 sets out definitions, cataloging a variety of phrases related to lease contracts along with their relating interpretations.
- Section 36-2A-219 demonstrates risk of loss instances, exemplifying when and under what circumstances the risk of loss from goods prevails.
- Section 36-2A-506 outlines the statutory limitation in addressing lease contract dilemmas. It notes the parties can curtail the limitation period to a minimum of a single year.
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How to write a Commercial Lease Agreement
As an entrepreneur, you might be intimidated by the intricate legal terminology. Nonetheless, with a comprehensible plan and the appropriate advice, you can assuredly outline your lease pact. Let's delve into the core elements of a commercial lease agreement, and how to finetune it to your requirements - perceive this as your approachable, lucid guide to proficiently traverse the sphere of commercial leases.
1. Permitted Uses
The "Authorized Uses" provision conveys how to utilize the rented premise. It precisely delineates the sanctioned actions. These constitute industrial actions, office tasks, storage, dispersal, and the manufacture and distribution of goods.
It's of paramount importance to correctly enlist all your proposed business actions here. This precision aids in circumventing potential lawful complications and ensures effective deployment of resources. Imbibe every aspect to circumvent unforeseen developments. This comprehension keeps your operations in order.
Industrial and light manufacturing, warehousing, office, distribution, and assembly, including designing, manufacturing and distributing branded merchandise and promotional products, including all activities incident or ancillary thereto and all other lawful uses and purposes.
2. Term and Option to Extend
(a) This pertains to the lease duration and prolongations. It initiates on the Commencement Date and concludes on the Termination Date. You have the capability to prolong it for two additional two-year phases under identical stipulations, albeit there could be a potential augmentation in the rent. Furnish a written notification to the landlord 30 days preceding the lease cessation to extend.
(b) "Duration" signifies both your primary lease term and any subsequent extensions.
Transparent lease durations are paramount for business strategizing and operations, in addition to prospective prolongations.
(a) The initial term of this Lease will commence on the Effective Date and expire on the Expiration Date. The Tenant may extend the Term of this Lease for [two] additional [two]-year extension term(s), on all the same terms and conditions (except for Rent, which will increase during extension Terms as provided below) contained in this Lease, by notifying the Landlord in writing of the Tenant’s election to do so not less than 30 days before the expiration date of the then-current Term, as the case may be.
(b) The initial term and any applicable extension term are referred to in this Lease as the “Term.”
3. Repairs and Maintenance
The "Maintenance and Repair" provision illuminates who's responsible for fixing breakages. It looks after both indoor and outdoor complications, such as dysfunctional plumbing or impaired masonry. The financial responsibility is borne by the landlord, not by you.
If a restoration is not dealt with promptly, you can arrange for repair work and deduct it from your rental payment. Continually keep a record of these occurrences for future retention. This provision is fundamental, as it earmarks upkeep accountabilities and shields you from unforeseen outlays.
From and after the Effective Date, and for the remainder of the Term, the Landlord shall perform ordinary maintenance and repair of the interior of the improvements on the Premises. In addition, the Landlord shall, at its own cost and expense without reimbursement by the Tenant, keep and maintain in good condition and repair, and make all necessary repairs and replacements to, the exterior walls, building slabs, foundations, structural parts and components, parking lots, gutters, downspouts, roof, roof membrane and coverings and any other part, component or system on the exterior of the Premises. The Landlord shall, at its own cost and expense without reimbursement by the Tenant, keep and maintain in good condition and repair, and make all necessary repairs and replacements to the sprinkler system, mechanical, HVAC, electrical and plumbing systems of the Premises. If the Landlord fails to perform any repair or replacement required to be made by the Landlord in this Lease, and the Landlord fails to cure such failure within 15 days after receipt of a written demand from the Tenant (or immediately, in the case of emergency repairs, including loss of heating and air conditioning), then the Tenant may make such repair or replacement and the Landlord shall reimburse the Tenant for the cost thereof. If the Landlord fails to pay such amount, then the Tenant may offset against the Rent due hereunder the amount so expended.
4. Alterations
"Modifications" depicts your privileges to transform the leased domain. You have the capability to instigate changes without property owner's approval, but extensive modifications become the property owner's possessions. Feel confident to withdraw personal assets such as shelves or equipment as long as it doesn't inflict harm to the premises. Grasping this provision aids in avoiding disagreements and supports you in strategizing your business arrangements effectively.
The Tenant may, at its own cost and expense and in a good workmanlike manner, make such alterations, additions, or improvements or erect, remove, or alter such partitions, or erect such racks, shelves, bins, machinery, furniture, fixtures, trade fixtures, equipment, and other personal property as it may deem advisable, without the consent of the Landlord. All fixtures and permanent alterations, additions, improvements, and partitions erected by the Tenant will be and remain the property of the Landlord during the Term, and will be abandoned by the Tenant at the expiration of this Lease. All racks, shelves, bins, machinery, furniture, equipment, and other personal property located in the Premises as of the Effective Date or otherwise installed by the Tenant may be removed by the Tenant at any time if the Tenant so elects. All such removals and restoration shall be accomplished so as not to damage the primary structure or structural qualities of the buildings and other improvements situated on the Premises.
5. Insurance
The "Indemnification" provision safeguards both lessee and landlord. Being the lessee, you require estate and responsibility insurance, designating the property owner as additional insured. The property owner shoulders the insurance for damage to premises.
'Renunciations of subrogation' inhibit insurance firms from recovering from the counter party following a loss. Your insurance agency should forewarn the landlord 30 days prior to annulment. Comprehending these terms ensures the economic protection of your enterprise.
(a) At all times during the Term, the Tenant shall maintain, at its sole cost and expense, policies of insurance containing the following insurance coverages (which policies shall name the Landlord as an additional insured):
(1) Property insurance with premiums paid in advance insuring the Tenant’s property using the standard Special Causes of Loss Form or equivalent for the full replacement value. The foregoing is referred to in this Lease as “Property Insurance.”
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(2) Commercial general liability insurance with respect to the Premises in amounts not less than $1,000,000 per occurrence, $2,000,000 aggregate limit using current ISO forms or equivalent.
(b) The Landlord shall obtain and keep in force during the Term of this Lease a policy or policies of insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof, as the same may exist from time to time, but in no event less than the total amount required by lenders having liens on the Premises, against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, flood (in the event same is required by a lender having a lien on the Property), and special extended perils ("all risk" as such term is used in the insurance industry). Such insurance must provide for a payment of loss thereunder to the Landlord or to the holder of mortgages or deeds of trust on the Premises.
(c) The policies required by this section must provide for standard waivers of any right of subrogation that the insurer of such party may acquire against the other party to this Lease, for losses that are actually insured against, even if the loss results from a negligent act or omission. The Tenant’s insurance company must provide the Landlord with a certificate of insurance on form ACORD-27 (for Property Insurance required to be carried under this Lease), or its equivalent, and ACORD-25 (for liability insurance required to be carried under this Lease), or its equivalent, which provides that the insurance may not be cancelled without giving the named insured at least 30 days’ prior written notice (or at least ten days’ written notice of cancellation in the event of the non-payment of premium). The Tenant may carry any required insurance under a blanket policy if that policy complies with the requirements of this Lease.
6. Events of Default
The "Instances of Default" provision enumerates deeds recognized as infringements of your lease. Common events encompass neglecting to remit rent, encountering insolvency, or not adhering to lease terms. Familiarize yourself with this section to sidestep these hazards, fostering cordial relations with your property owner and effectively managing your business.
The following events will be deemed to be Events of Default by the Tenant under this Lease:
(1) The Tenant fails to pay any installment of the Rent hereby reserved when due, or any other payment or reimbursement to the Landlord required under this Lease when due, and such failure continues for a period of 30 days after the Tenant’s receipt of written notice of such nonpayment;
(2) The Tenant becomes insolvent, or makes a transfer in fraud of creditors, or makes an assignment for the benefit of creditors;
(3) The Tenant files a bankruptcy petition or Tenant is adjudged bankrupt or insolvent in proceedings filed against the Tenant;
(4) A receiver or trustee is appointed for all or substantially all of the assets of the Tenant; and
(5) The Tenant fails to comply with any term, provision, or covenant of this Lease (other than the foregoing in this section 18), and does not cure such failure within 30 days after written notice thereof to the Tenant, or such longer period as may be necessary to cure such default provided the Tenant has promptly commenced curing such default and is diligently proceeding to obtain such cure.
7. Holdover
The "Continuity" provision addresses scenarios when you exceed your lease duration. If you don't vacate by the culmination of your lease term, you'll remit 125% of the standard rent for each continuity month. Assure that you comprehend the expenses of overextending and organize your termination procedure accordingly.
If the Tenant holds over after the expiration of the Term and does not surrender the Premises prior to the expiration of the Term, then for each such month that the Tenant is holding over, the Tenant shall pay to Landlord 125% of the Rent due under this Lease for each month.
What happens when a Commercial Lease Agreement expires?
When a business lease contract concludes, a bunch of outcomes could transpire. Here are some handy resources that detail the potential circumstances:
- Extend or Wrap up: Commercial tenants ought to deliberate whether to extend or wrap up their lease agreement significantly before its conclusion. Kicking off this process 6 to 12 months ahead is viewed as a good strategy.
- Shift to Month-to-Month: If the prime lease doesn't get extended or a fresh lease isn't executed, the tenant may have the chance to move into a month-to-month tenancy, given the landlord's acceptance.
- Landlord Assumes Possession: Occasionally, upon the termination of a commercial lease, the landlord might elect to take on the property themselves, for personal or business functions.
- Likelihood of Legal Action: If complications arise around the lease termination, say, if a tenant has routinely postponed rent payments or flouted the lease conditions, the lease conclusion could escalate to legal proceedings.
What are the penalties for breaking Commercial Lease Agreements?
Absolutely, the fallout from breaking a business lease contract can fluctuate, but typically there are a few habitual penalties:
- Outstanding Rent: One of the primary impacts typically is that the tenant remains responsible for the outstanding rent due based on the lease term, even post vacating the property.
- Advance Notice: A large number of commercial landlords command an advance notice period that can range from 30, 60, up to 90 days when the tenant opts to break the lease.
- Severance Charges and Extra Expenses: As determined by the details in the lease contract, commercial leases may impose severance charges, as well as assign responsibility for any promotional expenses borne for procuring a new tenant and possible cleaning charges.
- Legal Implications: Depending upon the situation and the nature of the breach, if grievance resolution techniques within the lease are exhausted, it may elevate to legal action or end up in a court dispute.
Seeing as the specifics of penalties may alter based on the lease contract, it's pivotal to scrupulously review the lease agreement to grasp the precise conditions involved in early conclusion.