Commercial Lease
A contract by which a property owner grants a tenant the right to use specified real property for commercial purposes for a defined term in exchange for rent. Governed by Texas common law and specific statutory provisions, distinct from the more heavily-regulated residential framework.
A commercial lease is a contract by which a property owner (the "landlord" or "lessor") grants a tenant (the "lessee") the right to use specified real property for commercial purposes for a defined term in exchange for rent. Commercial leases are governed by Texas common law and specific statutory provisions, distinct from the more heavily-regulated framework applicable to residential tenancies.
Lease structures
Gross lease: tenant pays a fixed rent; landlord pays operating expenses, taxes, insurance, and maintenance.
Net lease: tenant pays base rent plus some operating expenses. Variations: single-net (tenant pays property taxes), double-net (tenant pays taxes and insurance), triple-net (tenant pays taxes, insurance, and maintenance, common in retail and industrial).
Modified gross / modified net: hybrid structures specifying which expenses are tenant- vs landlord-paid.
Key commercial-lease provisions
(1) Premises description and use restrictions; (2) base rent and rent escalations (CPI, fixed bumps, market resets); (3) common-area maintenance (CAM) charges and reconciliation; (4) operating expense pass-throughs and audit rights; (5) tenant improvements and allowance; (6) renewal options; (7) assignment and subletting restrictions; (8) default and remedies; (9) personal guaranty (typical for closely-held tenants).
Texas-specific considerations
Texas does not regulate commercial rent or lease terms substantively, commercial leases are largely freedom-of-contract documents. The Texas landlord's lien (Tex. Prop. Code § 54.021) gives commercial landlords a statutory lien on tenant property within the leased premises, supplementing contractual remedies. The 30-day notice period required for residential tenancies does not apply to commercial leases, commercial-lease termination follows the lease's notice provisions.
Commercial-lease negotiation focuses on (1) operating expense and pass-through definitions (CAM caps, exclusions); (2) tenant improvements and landlord work obligations; (3) renewal and termination options; (4) personal guaranty scope and duration. Sophisticated tenant-side practice involves audit rights, exclusive-use protections, and clear assignment/subletting carve-outs for affiliates and successors.
Companion article: Commercial Leases in Texas
Practice guide: Commercial Lease Review in Texas