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The key to a healthy landlord-tenant relationship is to follow all of the guidelines that the legally-binding contract for the business property states. In essence, commercial lease agreements in Colorado aren't much different from residential leases. However, it's vital to know some of the key differences before creating the contract.
In general terms, a lease contract in Colorado offers the landlord quite some freedom to operate their commercial property. The following article will outline everything you need to know about the Colorado commercial lease agreement, including some mandatory disclosures that must be in every written document.
Colorado Commercial Lease Agreements
First, let's go over the main types of leases landlords can consider for their potential tenants:
- Gross Lease: Gross leases are known for benefiting the tenant over the landlord. Here, the tenant pays a fixed amount of monthly rent, whereas the landlord will have to pay for property expenses, including insurance, property taxes, and other operating expenses.
- Triple Net Lease: These leases, on the contrary, benefit the landlord over the tenant. In this case, the tenant pays for all of the expenses surrounding the property, including monthly rent and common area maintenance.
- Modified Gross Lease: Those who are looking for a middle-ground option may benefit from modified gross leases. Here, the landlord and tenant can agree upon who will pay for the property expenses.
As a landlord, you're allowed to choose one of the three options mentioned above. However, make sure that you outline these conditions carefully on the document so that the tenant understands the terms before signing.
Write Your Own
Now, we're ready to cover how to write commercial leases in Colorado. As mentioned before, lease terms in this state aren't too complicated to follow, so make sure to read until the end to know everything about renting a property in Colorado.
Introduction | Primary Factors
The first pages of the lease will outline the basic information of all the parties involved. Moreover, you must include the building's address, its square footage, the type of property it is, and the dates for the lease term.
Moreover, both the landlord and tenant must agree upon how the latter will use the commercial unit for their business activities. This section includes outlining the type of lease the landlord chose to have.
Finally, you must state the tenant's obligations to operate the unit, including maintenance responsibilities, cleaning sessions, and others. In case the landlord chose to discuss the expenses with the tenant, they must agree upon who will pay for the following:
- Utilities
- Maintenance
- Taxes
- Insurance
Rent, Security Deposit, and Renewal
First, you must state the amount of rent the tenant will have to pay each month, as well as the date on which the payment is due. You can also include any late fees, as long as they're compliant with Colorado law.
Landlords are free to specify the consequences the tenant may experience if they fail to pay rent on time. As for renewals, you may allow your tenant to renew the lease automatically once it ends, but you must add a clause in the document that states this information clearly.
Finally, security deposits are used to pay for any damage caused to the property that goes beyond regular wear and tear. In this case, the tenant pays for a fixed security deposit amount, and these funds will get deposited in a particular account. The landlord must specify how the money will get used and where it will be saved.
Licenses and Permits
The tenant's business must comply with Colorado law before they sign the document. This includes having the appropriate licenses and permits.
Vital Clauses
Some other factors the landlord may include in the lease include the following:
- Right of Entry
- Subleasing
- Waivers
- Holdovers
- Parking Terms
- Indemnification and Bankruptcy Statements
Miscellaneous Information
You're free to include these terms in your signed documents if you want, although it's not mandatory:
- Pet Terms
- Smoking Terms
- Advertising Terms
- Sign Placements
Specific Considerations
In Colorado, every landlord must include the following laws and regulations in their lease and notify their tenants:
Evictions: Every landlord in Colorado has the right to start eviction proceedings and terminate the business lease if one of the following scenarios happens:
- Breaching the lease
- Nonpayment of rent
- Criminal activity in the leased premises
Damage to Premises: Every tenant is responsible for making the necessary repairs to the property, as long as they exceed normal wear and tear.
Mandatory Disclosures
- Rider for Food Use: If the tenant's business serves food and drinks on the property must ensure that it follows Colorado's state laws at every moment. In case the business sells alcohol, for example, they must have the proper licenses to sell liquor.
- Lead Paint: Any property built before 1978 requires its landlord to provide the tenant with a lead paint disclosure on the agreement. If the tenant has an issue with having this hazardous material on the property, they have the right to know about it.
- Improvements to the Leased Premises: This section must outline all of the possible changes or improvements the landlord or tenant plans on doing for the property, including the process that must take place. Depending on the landlord's requirements, the tenant may have to request permission before doing any improvements.
Build Your Own
If you don't want to spend too much time going over your agreement terms, consider downloading our free lease form from our website! Our lease form includes everything you need to get your contract started, and you can download it in Word or PDF format.
Additionally, you can download a customizable version so that you can add any additional clauses you consider appropriate for the tenant.
Bottom Line
As you can see, drafting an agreement in Colorado will not be that complicated as long as all the parties understand each of the clauses. Remember that the agreement's terms must be reasonable for everyone involved, and they must be compliant with Colorado laws.
If you want to make things easier, you can download our lease forms and adjust the information to fit your needs.
Webinar
DoorLoop hosted this webinar with attorney Michael Larranaga from Larranaga Law to help answer many of your legal questions. Michael specializes in real estate law in Colorado and we covered:
- Creating a residential lease agreement
- Landlord-tenant issues and laws
- Grounds to evict a tenant
- Eviction process
- Preventing delays or fines
- Hiring an Attorney vs DIY
- Post COVID legal changes
- Security deposit laws
Feel free to learn more and watch this webinar for free.
FAQs
Do Leases in Colorado Need to Be Notarized?
Although the landlord or tenant can request to have the documents notarized, it's not mandatory by law. However, keep in mind that all leases must have valid signatures so that they're valid.
Can You Add Additional Clauses?
As long as the additional clauses are compliant with Colorado laws, you can add additional clauses to the document for some particular rules surrounding your property and the tenant.
Are Commercial Leases Different from Residential Leases?
Yes! Commercial leases tend to be more complex since they include more rules and disclosures for both the landlord and the tenant. Moreover, they usually last more time than residential leases.
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