Short Term Lease Agreement

This short term lease template, in a “Download Now” Word format, is a commercial lease agreement between landlord and tenant for the letting out of an office or other commercial premises.

This template can be used when the term of the lease is less than seven years. For a commercial lease agreement with a term of over seven years, see our Long Term Lease Agreement template.

Drafted by solicitors for straightforward completion, this “Download Now” lease agreement template includes guidance on how to fill the short term lease in.

This Short Term Lease Agreement is a comprehensive 30-page commercial lease form download, which includes 15 easy-to-follow sections.

Clauses in the Short Term Lease Agreement

• The rights of the landlord and tenant
• Rent, interest and rent review
• Repair and decoration of the office building
• Alterations of the commercial premises
• The tenant's legal obligations
• The tenant's use of the commercial premises

For further details of the terms included in this Short Term Lease Agreement, see the ‘Contents’ tab above.

This short term lease template includes the documents and wording required under the latest regulations to permit (as an option) the commercial lease to opt out of the Landlord and Tenant Act 1954. This gives the tenant and landlord the potential to agree that the tenant cannot apply to the court for an extension to the commercial lease.

Short Term Lease Agreement is one of a range of lease agreement templates we provide. The others are:

• Long Term Lease Agreement
• Shop Lease Agreement
• Office Building Lease Agreement
• Restaurant Lease Agreement
• Cafe Lease Agreement
• Workshop Lease Agreement

Short Term Lease Template Note:

Short Term Lease Agreement is supplied by ContractStore.com.

Other information:

• The pitfalls when entering into commercial leases
• Making sense of clauses in commercial lease agreements

Contents of Short Term Lease Agreement

This Short Term Lease Agreement is to be used when a building, which is divided up into separate units, is to be let for commercial purposes (e.g. offices, etc.).

Overall, this template is short as lease agreements go but it contains the main clauses that appear in commercial leases of this type. Though reasonably even-handed, this template is generally landlord-friendly.

This lease agreement is for a term of less than seven years. Commercial lease agreements for the term of seven years or more must be registered at the Land Registry.  

Landlord and tenant law is a complex area and legal advice is always recommended – both for landlords and tenants before entering into a commercial lease.

Enquiries by the landlord

Before granting a commercial lease, a landlord should make some tenant checks. Although this template doesn't contain any provision for a guarantee, it's not uncommon for a lease to a limited company, especially one which is owned and run by its shareholders, to require that one or more directors should personally guarantee the payment of the rent.

Enquiries by the tenant

The tenant will want to be certain about the following:

1. The condition of the premises - this short term lease agreement includes a clause stating that the tenant has to carry out repairs.
2. Planning position - the tenant should ascertain that planning permission exists and that local authority consents have been given for the construction of the building. 
3. The landlord's legal title - the tenant should ensure that the landlord is the owner of the building and is, therefore, in a position to grant the lease. 

Tenant's statutory rights to a renewal

In England & Wales, under the Landlord and Tenant Act 1954, a business tenant is entitled to have their lease renewed at the end of the term, except in certain specified circumstances; in particular, when the landlord wants to redevelop the site. It's, however, possible to exclude the provisions of the Act from the lease so that the tenant doesn't have any protection.

Until recently this involved an application to the court, but new regulations were enacted in 2003 which avoid the need for a court order. These are covered in our Short Term Lease Agreement template.

Certificates and reports

The following may also be required:

1. An Energy Performance Certificate - there are financial penalties for the landlord if the EPC isn't obtained when it's required. 
   
2. An Asbestos Survey Report - the landlord may already have a report for the building. If not and a report is required, then the tenant should ask the landlord to obtain one from one of the qualified surveyors. 
   
3. A Fire Risk Assessment - the tenant should ensure that the building, including the premises, has been assessed and ask to see a copy of the report.

Specific clauses 

1. Definitions

There are a number of details to be completed here, including:

• The address of the building and details of the premises
• The commencement and expiry date of the lease
• The interest rate on any late payment of rent (or service charge)
• The term (i.e. duration) of the lease
• The rent: normally an annual sum, either inclusive or exclusive of service charges
• Deposit: this may be required by the landlord on signature
• Rent review dates (e.g. if there is a five-year commercial lease, it might be subject to review at the end of the second year and annually thereafter)
• Permitted use
• Rights and reservations
• Service charge and services

2. Grant of commercial lease

This sets out the basic agreement – namely that the landlord will grant the lease under the terms set out in this template.

3. Rent and other payment

It's usual for rent to be payable in advance in quarterly – i.e. three monthly – instalments. The first instalment may not be for a full three months and therefore this will need to be specified. Alternate wording can be used if a rent free period has been agreed.

This clause also deals with any service charge payable (if applicable), interest due on any late payment of rent and the deposit. It also deals with the method of paying rent and the fact that the tenant cannot make any deductions from payments which are due.

4. Tenant's obligations

This clause sets out the basic rules to be adhered to by the tenant during the commercial lease and includes such matters as keeping the premises clean, repairing any damage which is caused, complying with fire, health and safety regulations, and complying with the regulations governing the building which are imposed by the landlord, etc.

This clause also deals with the charges for which the tenant is going to be directly responsible.

5. Landlord's obligations

This clause includes the landlord's obligation to keep the building insured and in good repair and to provide other services, where applicable.

6. Alterations

Any alterations to the premises which are let will normally require the landlord's consent. This clause makes it clear that the premises must be reinstated into their original condition when the lease comes to an end.

7. Rent review

This clause deals with the procedure for agreeing a new rent and the possible appointment of an expert (e.g. the Royal Institution of Chartered Surveyors), if there is disagreement. Where a rent free period is agreed this clause makes it clear that, for the purposes of the rent review, such rent free period is to be ignored.

8. Termination

The landlord has the right to terminate the commercial lease and recover the premises if the rent or service charge isn't paid on time or if the tenant commits any other breach or goes bankrupt. If such a situation occurs, recovery of possession my not be as straightforward as the wording of this clause suggests and legal advice will be required by the landlord. The landlord shouldn't attempt to take over occupation of the premises or to evict the tenant without taking legal advice first.

9. Suspension of rent

This would only apply if the property is damaged by an insured risk - in which case the landlord's insurance ought to be arranged so as to cover them for loss of rent.

10. Expiry

When the commercial lease comes an end, the premises must be handed over in the same condition as when the lease commenced (fair wear and tear excepted). This clause provides a mechanism for resolving a dispute between landlord and tenant as to whether building/decoration works are required (or the nature/extent of any works required) at termination. A surveyor is to be appointed to determine whether works are required and if so the nature/extent of those works. 

11. Assignment and sub-letting

There is a restriction on both assignment and sub-letting. In spite of this clause, it's always possible for the landlord to give consent should this be requested.

12. Disputes and governing law

As drafted, this Short Term Lease Agreement is governed by English law and disputes are referred to the courts.

13. Notices

This sets out the procedure for notices which have to be served in accordance with the terms of the lease.

14. Statutory matters

There are some technical points here which apply where the lease is granted in England. Under the Landlord and Tenant Act 1954, a business tenant is entitled to have their commercial lease renewed at the end of the term, except in certain circumstances; in particular, when the landlord wants to redevelop the site. It's, however, possible to exclude the provisions of the Act so that the tenant doesn't have any protection.

Until recently this involved an application to the court but new regulations were enacted in 2003 which avoid the need for a court order. Instead, there are now three specific requirements if the tenant isn't to obtain security of tenure at the end of the term:

1. The landlord must give notice to the tenant in a prescribed form at least 14 days before the tenant enters into the tenancy or becomes contractually bound to do so. The form of notice which contains a 'health warning' is attached to the Short Term Lease Agreement template.
   
   
2. The tenant must sign a declaration in front of a solicitor or commissioner for oaths confirming that they have received the landlord's notice. The form of declaration is attached to the Short Term Lease Agreement template.
   
   
3. The lease must refer to the above procedures as having being complied with and confirm that the landlord and tenant agree to exclude the security of tenure provisions in Sections 24 to 28 of the Landlord & Tenant Act 1954.

This clause also excludes the operation of the Contracts (Rights of Third Parties) Act, which might give certain third parties the benefit of provisions in the lease.