retail-lease-agreement

# Retail Lease Agreement

Drafts a balanced retail lease for shopping center or commercial property tenancies covering financial, operational, and protective provisions for both landlord and tenant.

## Prerequisites

1. **Party information** — legal names, entity types, notice addresses for Landlord and Tenant
2. **Premises description** — unit number, address, center name, square footage (usable vs. GLA)
3. **Lease term** — commencement trigger (execution / delivery / opening), expiration, free-rent periods
4. **Rent structure** — base rent, escalation type, percentage rent rate and breakpoint
5. **Tenant improvements** — delivery condition, TI allowance amount, construction timeline
6. **Negotiated deal points** — exclusive use scope, radius restriction distance, CAM cap, merchants' association

## Output Structure

Draft sections in order. Populate from deal terms only — do not invent figures.

### 1. Parties & Premises

- Legal names, entity type, notice addresses
- Premises: unit, address, center name, SF basis (usable / GLA), included common areas

### 2. Lease Term & Commencement

- Start trigger, expiration date
- Rent abatement (within term or extends term — specify)
- Landlord delivery deadline; Tenant opening deadline

### 3. Base Rent & Escalations

| Period | Annual Rent | Monthly Rent | Escalation Basis |
|--------|-------------|--------------|------------------|
| Year 1 | [_] | [_] | Fixed |
| Year 2+ | [_] | [_] | Fixed % / CPI / FMV reset |

Payment: due 1st of month; remittance address/account; late fee and grace period.

### 4. Percentage Rent

- Rate: __% of Gross Sales
- Natural breakpoint = Base Rent ÷ Rate (or negotiated fixed breakpoint — specify which)
- Calculation period: monthly / quarterly / annual
- Reporting: within __ days after each period; annual certified statement
- Landlord audit rights: __ days notice; Tenant maintains records __ years

**Gross Sales — Include:** all revenues from business in/on/from Premises (cash, credit, layaway, online orders fulfilled from Premises, gift card redemptions, vending/kiosk)

**Gross Sales — Exclude:** returns/refunds, sales tax remitted, employee discounts (cap __%), insurance proceeds for damaged/stolen goods, fixture/equipment sales not in ordinary course

### 5. Additional Rent (Triple-Net Pass-Throughs)

| Charge | Share Basis | Cap / Exclusions |
|--------|-------------|------------------|
| CAM | Pro-rata (Premises SF ÷ total GLA) | Annual increase cap: __%; exclude capital items with useful life >1 yr |
| Real Estate Taxes | Pro-rata | Include special assessments? [Y/N] |
| Property Insurance | Pro-rata | Landlord maintains building/CA policy; Tenant pays share |

Reconciliation: annual statement within __ days of year-end; Tenant audit right on __ days notice.

**Tenant's Own Insurance (Tenant's sole cost):**
- CGL: $__M per occurrence / $__M aggregate
- Property/contents: replacement value
- Business interruption: __ months

### 6. Permitted Use & Continuous Operation

- **Permitted Use:** exact description of products/services and trade name — no broad categories
- **Continuous Operation:** operate during all hours center is open to public
- **Dark store remedy:** percentage rent adjustment / termination right / liquidated damages — specify
- **Permitted closures:** casualty restoration, force majeure, remodeling with Landlord approval (max __ days)

### 7. Premises Delivery & Tenant Improvements

**Delivery Condition:** As-is / Broom clean / Vanilla box (HVAC, electrical, plumbing stubbed)

**TI Allowance:**

| Element | Value |
|---------|-------|
| Amount | $__ PSF / $__ total |
| Eligible costs | Hard construction; architectural fees / permits / PM (specify) |
| Disbursement | Paid invoices + unconditional lien waivers; Landlord pays within __ days |
| Expiration | Forfeited if not drawn by __ |

**Construction:** Licensed/insured contractors; Landlord-approved plans; all permits and ADA compliance; completion __ days after delivery; open for business __ days after delivery. Delay carve-outs: force majeure and Landlord-caused delays (excusable); all others unexcused.

### 8. Signage

- Exterior, window, and illuminated signage requires prior written Landlord approval
- Comply with center signage criteria, local zoning, and design guidelines
- Tenant bears all fabrication, installation, maintenance, and removal costs

### 9. Exclusive Use & Radius Restriction

**Exclusive Use (if negotiated):**

| Element | Value |
|---------|-------|
| Protected category | [specific products/services] |
| Scope | Entire center / Inline only (excludes anchors/pads) |
| Carve-outs | Existing tenants as of Lease Date; de minimis (<__% of sales) |

**Radius Restriction (if negotiated):**

| Element | Value |
|---------|-------|
| Radius | __ miles from Premises |
| Duration | Coterminous with Lease (+ __ months post-expiration if negotiated) |
| Scope | All locations / Same trade name or ownership only |

### 10. Default & Remedies

| Default Type | Notice | Cure Period |
|-------------|--------|-------------|
| Monetary | Written | __ days (typically 5–10) |
| Non-monetary (curable) | Written | 30 days; extended if cure diligently pursued |
| Non-monetary (incurable) | Written | None |

**Landlord remedies:** termination; re-entry/repossession; reletting on Tenant's account; damages = unpaid rent + reletting costs + unamortized TI + PV of remaining rent less reletting proceeds.

Verify remedies comply with applicable state landlord-tenant law. Do not include unenforceable penalty provisions. `[VERIFY]`

### 11. Standard Commercial Provisions

- Assignment/subletting: Landlord consent required; reasonable criteria
- Maintenance: Tenant → interior; Landlord → structure, roof, common areas
- Indemnification: mutual, based on respective negligence/willful misconduct
- Casualty/condemnation: restoration obligations and termination thresholds
- SNDA (subordination, non-disturbance, attornment)
- Estoppel certificates: deliver within __ days of request
- Merchants' association: dues $__ initial; adjustment mechanism __
- Dispute resolution: Litigation / Arbitration (AAA Commercial Rules)
- Governing law: State of __

### 12. Signature Blocks

- Authorized signatories with title and date for each party
- Corporate authority recitals for entity parties
- Notarization / witness lines if required by state law or for recording

## Guidelines

- **Gross Sales definition** is the most heavily negotiated provision — flag online/omnichannel sales attribution ambiguities for client review
- **CAM exclusions**: confirm whether management fees are capped (commonly 10–15% of CAM) and whether capital replacements are excluded or amortized
- **Continuous operation** may be unenforceable as specific performance in some jurisdictions — consider liquidated damages alternative `[VERIFY]`
- **ADA compliance** responsibility must be allocated explicitly (common area vs. Premises interior)
- **TI disbursements**: confirm lien waiver requirements comply with state mechanics' lien statutes `[VERIFY]`
- **Percentage rent breakpoints**: distinguish natural (Base Rent ÷ Rate) from artificial (negotiated fixed) — document which applies
- Tag jurisdiction-specific citations with `[VERIFY]` when accuracy is uncertain