When leasing out commercial property in New Jersey, it’s crucial for landlords to include specific, well-drafted clauses in the lease agreement to safeguard their investment, minimize legal disputes, and maintain control over the property. A commercial lease is more than just a rental contract—it’s a legally binding document that governs the relationship between landlord and tenant for years to come. Whether you’re renting to a retail store, office tenant, or industrial user, having these essential lease clauses can save time, money, and stress.
New Jersey commercial real estate law provides flexibility to landlords and tenants to contract the terms they desire, but without clearly articulated lease provisions, that flexibility can become a liability. By including tailored clauses in a commercial lease, landlords can define expectations, limit liabilities, and create enforceable rights and remedies in case of disputes or noncompliance.
Identification of Parties and Property
Begin with a clear identification of the parties to the lease—typically the legal name of the landlord (which may be an LLC or other entity) and the tenant. It’s also essential to accurately describe the leased premises. This includes:
This foundational information ensures clarity and avoids ambiguity that could lead to legal disputes.
Lease Term and Renewal Options
Every NJ commercial lease should define the initial term (e.g., 3, 5, or 10 years), including the exact start and end dates. Many landlords also choose to offer renewal options, which give tenants the right—but not the obligation—to extend the lease.A well-drafted renewal clause should specify:
Holdover provisions are also critical—they determine what happens if the tenant stays beyond the lease term, usually triggering higher rent and month-to-month tenancy.
Rent Structure and Payment Terms
The rent clause should outline not only how much the tenant must pay, but also when and how rent should be paid. This includes:
Landlords should also include provisions for late fees, returned check charges, and interest on overdue balances to protect their income stream.
Security Deposit Provisions
In New Jersey, landlords can set reasonable security deposit amounts to cover potential tenant defaults or damages. The lease should state:
Permitted Use Clause
A commercial lease should define exactly how the tenant may use the space. The permitted use clause:
It’s wise to be specific yet flexible enough to accommodate reasonable changes in the tenant’s operations over time.
Maintenance, Repairs, and Alterations
Clearly spelling out who is responsible for maintenance and repairs avoids confusion and future disputes. Typically:
Alteration clauses should require landlord approval for any changes to the premises, ensuring that modifications meet building codes and don’t diminish the property’s value.
Utilities and Operating Expenses
Tenants usually cover utilities, but the lease should specify which services are their responsibility and whether they are separately metered or allocated by square footage. Additionally, outline the tenant’s share of:
Insurance and Indemnification Requirements
Commercial leases in New Jersey should require tenants to carry:
Tenants should name the landlord as an additional insured. Include an indemnification clause to protect the landlord from claims resulting from the tenant’s actions, negligence, or business activities.
Assignment and Subletting
This clause governs whether tenants can assign the lease or sublet the space to another party. As a landlord, you generally want the right to approve any new tenant. A good clause should address:
Default, Remedies, and Termination
Define what constitutes a tenant default—such as failure to pay rent, illegal activity, or abandonment—and what remedies the landlord may pursue. Remedies often include:
This clause ensures that landlords have clear legal standing to act quickly in case of violations.
Force Majeure Clause
In light of the pandemic and other unforeseeable events, a force majeure clause is more important than ever. It can excuse performance obligations (like paying rent or completing build-outs) during events beyond the parties’ control, such as:
Legal Compliance and Governing Law
Ensure the lease states that it is governed by New Jersey law. Also, require the tenant to comply with all local ordinances, zoning laws, building codes, and other regulations.
New Jersey commercial landlords face numerous legal and practical challenges. A comprehensive commercial lease isn’t just a formality—it’s a powerful tool that protects your property, clarifies responsibilities, and ensures long-term profitability. Whether you manage a single storefront or a multi-tenant office complex, including these essential clauses in your lease will help mitigate risk, avoid legal disputes, and create a stable, professional landlord-tenant relationship.