Commercial Rent to own Agreement - Template Form Pro · US-law

COMMERCIAL LEASE WITH OPTION TO PURCHASE
(RENT-TO-OWN AGREEMENT)

State of ________

RECITALS

A. This Commercial Lease with Option to Purchase (the “Lease”) is entered into and made effective as of ________ (the “Effective Date”), by and between the lessor (the “Landlord”), of the following address:

________
a ________,
of
________

and the following lessee (the “Tenant”), of the following address:

________
a ________,
of
________

B. For purposes of convenience, the following party (the “Authorized Party”) is also authorized to manage the Premises and act on Landlord’s behalf:

________
________

Such Authorized Party may act in place of the Landlord for the purposes of this Lease, where required or permitted by law.

C. WHEREAS, the Landlord and the Tenant may be collectively referred to as the “Parties” and individually as a “Party.”

D. WHEREAS, Landlord intends to lease the herein-described property to the Tenant for commercial purposes, with the option of the Tenant purchasing said property in accordance with the terms set forth below.

NOW, THEREFORE, in consideration of the mutual obligations and covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

§ I. PREMISES.

1. Landlord, in consideration of the lease payments described herein, leases to Tenant the property (the “Premises”) described as follows:

________

2. The Premises is located at the following address:

________

3. The legal description of the real property is as follows:

________

4. The space described equals ________ rentable square feet.

§ II. LEASE TERM.

5. This Lease shall commence on ________ at 12:01 a.m. and shall continue until its termination under this Section on ________ at 11:59 p.m. (the “Lease Term”).

6. After the date of termination, if Tenant does not exercise the option to purchase, this Lease shall automatically renew for successive terms of equal length until the Tenant exercises the purchase option or either Party terminates this Lease upon written notice in accordance with § XL.

7. At the expiration of this Lease, if Tenant does not exercise the purchase option, Tenant shall provide a forwarding address to Landlord to receive any funds owed or other notices.

8. Tenant shall notify Landlord in advance of any anticipated extended absence from the Premises.

§ III. EARLY TERMINATION.

9. The Tenant shall have the option to terminate this Lease prior to the natural end of the Lease Term upon not less than ________ days’ prior written notice.

10. If Tenant terminates this Lease prior to the natural end of the Lease Term, Tenant shall pay an early termination fee of $________ (________). The Parties agree that this amount represents a reasonable estimate of the damages that Landlord would sustain and is not intended as a penalty.

§ IV. RENT PAYMENTS.

11. Tenant shall pay to Landlord ________ installments of $________ (________), which equates to $________ per rentable square foot ($/SF).

12. Rent shall increase ________% (________ percent) on an annual basis.

13. Rent shall be payable in advance on the ________ day of each applicable period.

14. Lease payments shall be made to the Landlord at the following address:

________

The payment address may be changed at the discretion of the Landlord, and the Tenant shall be informed of such change by written notice.

15. The first full rent payment under this Lease shall be due on ________. No holiday, special event, or weekend shall excuse Tenant’s obligation to pay timely rent as described in this Lease.

16. Tenant shall be permitted a grace period of ________ days to pay any rent due. If Tenant does not pay rent within the grace period, Tenant may be subject to a late charge.

17. For any payment not paid when due, the Tenant shall, to the extent allowed under applicable law, pay a late fee of $________ (________). Any returned or dishonored payment shall be subject to a service charge of $________, to the extent permitted by applicable law.

§ V. SECURITY DEPOSIT.

18. Upon execution of this Lease, Tenant shall pay to Landlord, in trust, a security deposit of $________ (________), to be held for the reasonable cleaning or repair of damage to the Premises upon the expiration or termination of this Lease, where Tenant does not exercise the purchase option, or in the event of default by Tenant, as provided by law.

19. If Tenant does not exercise the purchase option, Tenant agrees to be liable to Landlord at the expiration or termination of this Lease for all damage to the Premises, except ordinary wear and tear. Landlord may hold the security deposit in a non-interest-bearing account, in which case no interest is due to Tenant; or Landlord may elect to hold the deposit in an interest-bearing account and allow Tenant to receive interest, if applicable. Tenant may not apply the security deposit toward any rent.

20. In the event of any sale or assignment of this Lease by Landlord, Tenant’s security deposit shall be transferred to the new owner or assignee, and Landlord shall be released from liability to Tenant for return of the security deposit.

21. Deductions from the security deposit may be made for, among other things: unpaid rent or utilities, late fees, cleaning, key replacement, and/or removal of abandoned property. This list is illustrative and not exhaustive.

22. The security deposit shall be held at the following financial institution:

________

23. Landlord shall return the security deposit, less any lawful deductions together with an itemized written statement, within the period required by applicable law following the termination of this Lease and Tenant’s surrender of the Premises.

§ VI. OPTION CONSIDERATION.

24. Nonrefundable option consideration in the amount of $________ (________), paid by the Tenant as consideration for this option, shall be credited to the purchase price at closing if the Tenant timely exercises the option to purchase.

25. If the Tenant does not timely exercise the option to purchase, the Tenant shall forfeit the nonrefundable option consideration.

§ VII. USE OF PREMISES.

26. Tenant may use the Premises only for the following purpose:

________

27. The Premises may be used for additional purposes only with the prior express written consent of the Landlord, which shall not be unreasonably withheld.

§ VIII. OPTION TO PURCHASE.

28. Tenant, upon satisfactory performance under this Lease, shall have the option to purchase the real property described herein for a purchase price of $________ (________), provided that Tenant timely exercises the option and is not in default under this Lease. Thereafter, each Party shall promptly execute any and all further instruments and documents, including a Purchase and Sale Agreement, reasonably required to effect the purchase of the real property.

29. Landlord shall credit toward the purchase price at closing those rent payments timely made by Tenant in the following manner:

________

30. Landlord agrees to deliver, and Tenant agrees to accept, title to the Premises subject only to: a lien for taxes and assessments levied against the property; any covenants, conditions, restrictions, easements, rights, and rights-of-way of record; and such other exceptions as Landlord and Tenant approve in writing. Landlord shall deliver to Tenant a preliminary title report within thirty (30) days after Tenant’s exercise of the option.

31. To exercise the option to purchase, the Tenant must deliver to the Landlord written notice of Tenant’s intent to purchase not less than ________ days prior to the expiration of the Lease Term. The written notice must specify a valid closing date, which must occur before the original expiration date of this Lease.

32. The option to purchase is exclusive and non-assignable and exists solely for the benefit of the named Parties. Should Tenant attempt to assign, convey, delegate, or transfer this option without the Landlord’s express written permission, any such attempt shall be deemed null and void.

33. Tenant agrees that closing costs in their entirety, including any points, fees, and other charges required by a third-party lender, shall be the sole responsibility of Tenant. The only closing cost apportioned to Landlord shall be the pro-rated share of property taxes due at the time of closing, for which Landlord is solely responsible.

§ IX. FINANCING DISCLAIMER.

34. THE PARTIES ACKNOWLEDGE THAT IT IS IMPOSSIBLE TO PREDICT THE AVAILABILITY OF FINANCING FOR THE PURCHASE OF THE PREMISES.

35. OBTAINING FINANCING SHALL NOT BE A CONDITION OF PERFORMANCE OF THIS OPTION TO PURCHASE.

36. THE PARTIES FURTHER AGREE THAT THIS OPTION TO PURCHASE IS NOT ENTERED INTO IN RELIANCE UPON ANY REPRESENTATION OR WARRANTY MADE BY EITHER PARTY EXCEPT AS EXPRESSLY SET FORTH HEREIN.

§ X. EXCLUSIVITY.

37. Landlord shall not, directly or indirectly, through any agent, employee, or other representative, lease any space within the property (other than the Premises described in this Lease), or permit the use or occupancy of any such space whose primary business activity is in, or may result in, competition with the Tenant’s primary business activity, without an express written agreement signed by both Parties.

38. Landlord hereby grants the Tenant the exclusive right to conduct its primary business activity on the Premises.

§ XI. FURNISHINGS.

39. The following furnishings will be provided by the Landlord to the Tenant:

________

40. If Tenant does not exercise the purchase option, Tenant shall return all such items at the end of the Lease Term in as good condition as received at the start of the Lease, excepting normal wear and tear resulting from ordinary use.

§ XII. PARKING.

41. Tenant shall be entitled to use ________ parking spaces for the parking of motor vehicles of the Tenant and its patrons.

§ XIII. STORAGE.

42. Tenant shall be permitted to store items of personal property at the Premises during the Lease Term.

43. Landlord shall not be held liable for any loss of or damage to such stored items, except to the extent caused by Landlord’s gross negligence or willful misconduct.

§ XIV. PROPERTY INSURANCE.

44. Landlord and Tenant shall each maintain appropriate insurance for their respective interests in the Premises and property located thereon.

45. Tenant’s property insurance shall be in an amount not less than $________ (________).

46. Landlord shall be named as an additional insured party on any and all such policies.

47. Tenant shall deliver to Landlord evidence of adequate insurance in force issued by companies reasonably satisfactory to Landlord.

48. Landlord shall receive advance written notice from the insurer prior to any cancellation or termination of such policies.

49. Tenant shall also maintain any other insurance which Landlord reasonably requires for the protection of Landlord’s interest in the Premises.

50. Tenant is responsible for maintaining property insurance on its own property.

§ XV. LIABILITY INSURANCE.

51. Tenant shall maintain commercial general liability insurance on the Premises in an amount not less than $________ (________) per occurrence.

52. Tenant shall deliver to Landlord evidence that sufficient insurance is in force and issued by companies reasonably satisfactory to Landlord.

53. Landlord shall receive advance written notice from the insurer prior to any cancellation or termination of such insurance policies during the Lease Term.

§ XVI. MAINTENANCE.

54. Landlord shall be responsible for maintaining the Premises in good repair at all times during the Lease Term, subject to Tenant’s obligations under § XX.

§ XVII. UTILITIES.

55. Landlord shall be responsible for paying for and maintaining provision of all utilities under this Lease, except as otherwise provided herein.

§ XVIII. SUBORDINATION OF LEASE.

56. This Lease is subordinate to any mortgage or deed of trust that now exists, or may hereafter be given by Landlord, with respect to the property; provided that, upon request, Tenant shall be entitled to a commercially reasonable non-disturbance agreement from any such lender.

§ XIX. TAXES.

57. Taxes related to the Premises or its use shall be allocated as follows:

a. Real Estate Taxes — Landlord shall pay all real estate taxes and assessments for the Premises.

b. Personal Property and Other Taxes — Landlord shall pay all personal property taxes and any other charges levied against the Premises and attributable to Tenant’s use of the Premises, together with all sales and/or use taxes (if any) that may be due in connection with the lease payments.

§ XX. PROPERTY CONDITION.

58. Tenant stipulates that Tenant has examined the Premises prior to signing this Lease or has knowingly waived such inspection.

59. Tenant affirms that Tenant has not relied on any representations made by Landlord regarding the condition of the Premises. Tenant accepts the Premises “as is,” with no representations from Landlord beyond those contained herein or required by applicable law of the State of ________, including no express or implied warranties.

60. Tenant agrees not to damage the Premises and to be responsible for any damage to the Premises resulting from any activity of Tenant’s invitees, licensees, and/or guests. If any such damage occurs, Tenant shall pay for the damage.

61. If, at the end of the Lease Term, Tenant does not exercise the option to purchase, Tenant agrees to return the Premises in the same condition as when Tenant took possession, with the exception of normal wear and tear.

62. Tenant must notify Landlord within twenty-four (24) hours of any condition requiring maintenance.

§ XXI. QUIET ENJOYMENT.

63. Provided that Tenant pays the rent and observes and performs all of the covenants, conditions, and other terms of this Lease, Tenant shall peaceably and quietly hold and enjoy the Premises for the Lease Term without hindrance or interruption by Landlord or any person lawfully claiming by, through, or under Landlord, subject to the terms and conditions of this Lease.

64. Landlord covenants that Landlord has full right and authority to enter into this Lease and to grant the leasehold estate and option to purchase described herein.

65. Tenant shall not commit, nor permit to be committed, any act or omission that would disturb the quiet enjoyment of any other tenant or occupant of the property, or that would interfere with the lawful rights of Landlord in the Premises.

66. Any interruption of services or temporary inconvenience caused by repairs, alterations, or other necessary actions undertaken by Landlord in accordance with this Lease shall not be deemed a breach of the covenant of quiet enjoyment.

§ XXII. MECHANICS’ LIENS.

67. Neither Tenant nor anyone claiming through Tenant shall have the right to file mechanics’ liens or any other lien against the Premises, and the recording of this Lease (or a memorandum thereof) constitutes notice that such liens are invalid, to the extent permitted by applicable law.

68. Tenant agrees to give actual advance notice to any contractors, subcontractors, or suppliers of goods, labor, or services that such liens will not be valid, and to take whatever additional steps are necessary to keep the Premises free of all liens resulting from construction done by or for the Tenant.

§ XXIII. DANGEROUS AND HAZARDOUS MATERIALS.

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§ XXIV. DESTRUCTION OR CONDEMNATION OF PREMISES.

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71. Tenant shall give Landlord timely notice of any damage to the Premises.

§ XXV. TENANT HOLDOVER.

72. If Tenant does not provide timely written notice to Landlord of Tenant’s intent to surrender, or does not vacate the Premises at the end of the Lease Term, or otherwise remains in possession without exercising the option to purchase, a month-to-month tenancy shall be created, subject to all the terms and conditions of this Lease.

73. Such month-to-month tenancy shall remain in effect until such time as Landlord and Tenant, in writing, extend or renew the Lease for a specific term.

74. If Tenant becomes a month-to-month tenant, Tenant must give thirty (30) days’ written notice to Landlord of Tenant’s intent to surrender the Premises. Landlord may terminate such tenancy at any time by serving Tenant written notice of termination or by other means permitted by applicable law of the State of ________. Tenant shall vacate the Premises at Landlord’s lawful demand.

§ XXVI. DEFAULTS.

75. Tenant shall be in default of this Lease if Tenant fails to fulfill any lease obligation or term by which Tenant is bound under this Lease.

76. Subject to any governing law that provides otherwise, if Tenant fails to cure any financial obligation within thirty (30) days, or any other obligation within sixty (60) days, after written notice of such default is provided by Landlord to Tenant, Landlord may take possession of the Premises in accordance with applicable law, without foreclosing Landlord’s ability to recover damages. Alternatively, Landlord may elect to cure any default, and the cost of such action shall be added to Tenant’s financial obligations under this Lease.

77. Tenant shall pay all costs, damages, and expenses (including reasonable attorneys’ fees and expenses) suffered by Landlord as a direct result of Tenant’s default. All sums or charges Tenant is required to pay under this Lease shall constitute additional rent, whether or not designated as “additional rent.”

78. The rights provided by this Section are cumulative and are in addition to any other rights afforded by law.

§ XXVII. EMINENT DOMAIN.

79. This Lease shall automatically terminate if the Premises are taken in their entirety by eminent domain. To the extent permitted by law, the Tenant shall have the right to make a separate claim against the condemning authority for:

a. The value of the Tenant’s leasehold and option interests;

b. Loss of business revenue; and

c. Moving and relocation expenses.

§ XXVIII. CUMULATIVE RIGHTS.

80. The rights of the Parties under this Lease are cumulative and shall not be construed as exclusive unless otherwise required by applicable state law.

§ XXIX. LANDLORD ACCESS TO PREMISES.

81. Subject to Tenant’s consent (which shall not be unreasonably withheld) and reasonable advance notice, Landlord shall have the right to enter the Premises to make inspections, provide necessary services, make repairs, or show the Premises to prospective tenants or purchasers. Landlord does not assume any liability for the care or supervision of the Premises.

82. As provided by law, in case of emergency, Landlord may enter the Premises without Tenant’s prior consent.

83. If Tenant informs Landlord that Tenant will not exercise the purchase option, then during the last three (3) months of this Lease, or any extended period, Landlord shall be permitted access to the Premises to display “For Lease” signs and to show the Premises to prospective future tenants.

§ XXX. INDEMNITY REGARDING USE OF PREMISES.

84. To the extent allowed by law, Tenant agrees to indemnify, hold harmless, and defend Landlord from and against any and all losses, claims, liabilities, and expenses, including reasonable attorneys’ fees, which Landlord may suffer or incur in connection with Tenant’s possession, use, or misuse of the Premises, except to the extent arising from Landlord’s own act, omission, or negligence.

§ XXXI. COMPLIANCE WITH LAWS.

85. Tenant shall promptly comply with all applicable laws, ordinances, requirements, and regulations of federal, state, county, municipal, and other authorities, and with the requirements of any fire insurance underwriters. Notwithstanding the foregoing, Tenant shall not be required by this provision to make alterations to the exterior or structure of the building.

§ XXXII. AMERICANS WITH DISABILITIES ACT COMPLIANCE.

86. As required by the Americans with Disabilities Act (ADA), 42 U.S.C. § 12101 et seq., businesses that are open to the public or that employ fifteen (15) or more persons require that the Premises be accessible to individuals with disabilities. In the event the Premises must be altered for ADA compliance, the cost of improvements, alterations, and/or modifications necessary for such compliance shall be the responsibility of Landlord.

§ XXXIII. SUBLETTING AND ASSIGNMENT.

87. Tenant may not assign or sublease any interest in the Premises, nor effect a change in the majority ownership of the Tenant (from the ownership existing at the inception of this Lease), nor assign, mortgage, or pledge this Lease, without the prior express written consent of the Landlord, which shall not be unreasonably withheld.

§ XXXIV. COUNTERPARTS.

88. This Lease may be executed in counterparts, including by electronic signature in accordance with the Electronic Signatures in Global and National Commerce Act (E-SIGN) and the Uniform Electronic Transactions Act (UETA), all of which together shall constitute a single agreement. If the dates set forth at the end of this document differ, this Lease shall be effective as of the later date on which both Parties have signed.

§ XXXV. ENTIRE AGREEMENT.

89. This Lease contains the entire agreement of the Parties, and there are no other promises or conditions in any other agreement, whether oral or written, concerning the subject matter of this Lease.

90. This Lease supersedes any prior written or oral agreements between the Parties.

§ XXXVI. HEIRS AND ASSIGNS.

91. Tenant may not transfer or assign this Lease, or any portion of it, to a third party except as expressly permitted herein. Notwithstanding the foregoing, all covenants of this Lease shall bind and inure to the benefit of the heirs, executors, administrators, successors, and permitted assigns of the Parties.

§ XXXVII. SEVERABILITY.

92. If any provision of this Lease is held to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable.

93. If a court finds that any provision of this Lease is invalid or unenforceable, but that by limiting such provision it would become valid and enforceable, then such provision shall be deemed written, construed, and enforced as so limited.

§ XXXVIII. AMENDMENT.

94. This Lease may be modified or amended only in writing signed by the Party against whom enforcement of the amendment is sought.

§ XXXIX. GOVERNING LAW AND VENUE.

95. This Lease shall be governed by and construed in accordance with the laws of the State of ________, without regard to its conflict-of-laws principles. The Parties agree that the exclusive venue for any dispute arising under this Lease shall be the state or federal courts located in ________ County, State of ________.

§ XL. NOTICE.

96. Any notice or communication required or permitted under this Lease shall be sufficiently given if delivered in person, by nationally recognized overnight courier, or by certified mail, return receipt requested, to the address set forth in the opening of this Lease or to such other address as a Party may furnish to the other in writing.

§ XLI. WAIVER OF CONTRACTUAL RIGHTS.

97. The failure of either Party to enforce any provision of this Lease shall not be construed as a waiver or limitation of that Party’s right to subsequently enforce and compel strict compliance with every provision of this Lease.

§ XLII. BINDING EFFECT.

98. The provisions of this Lease shall be binding upon and inure to the benefit of both Parties and their respective legal representatives, successors, and permitted assigns.

IN WITNESS WHEREOF, the Parties execute this Lease as follows:

EXECUTION:

_________________________________
________, ________ and Representative of ________, Landlord

_________________
Date

_________________________________
________, ________ and Representative of ________, Tenant

_________________
Date

ACKNOWLEDGMENT

State of ________
County of ________

On this ________, before me, ________, a Notary Public in and for said State, personally appeared ________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that they executed the same in their authorized capacity(ies).

WITNESS my hand and official seal.

_________________________________
Notary Public
My commission expires: ________