ABA Family Legal Guide

Forming and Operating a Small Business

Starting a Business

Commercial Leases

What are the most important clauses in a basic commercial lease?

A basic lease will require you, the tenant, to pay the landlord a sum of money for the privilege of operating your business in the landlord's building. This will generally be referred to as base rent. Base rent is calculated by taking the square footage of the space and multiplying it by a set dollar amount (i.e., 5,000 square feet x $2.25 per square foot = base rent for the year). The square footage used in the lease is not the same as the "usable" square footage, as the usable footage is always less than what you pay rent on. The rent per foot, and the way the square footage is figured, may or may not be negotiable, depending on supply and demand.