M-Wakili

CONTACT

FAQ

LOGIN

REGISTER

Ask a lawyer:
What should be included in a Lease Agreement for a commercial property?

A lease agreement for a commercial property in Kenya is a legally binding contract between a landlord and a tenant outlining the terms and conditions of the rental of a commercial property. It is crucial to have a comprehensive and well-drafted lease agreement to protect the interests of both parties.

Table of Contents

  1. Introduction

  2. Essential Clauses in a Commercial Lease Agreement 2.1. Parties 2.2. Premises 2.3. Term of Lease 2.4. Rent and Payment 2.5. Use of Premises 2.6. Maintenance and Repairs 2.7. Insurance 2.8. Default and Termination 2.9. Governing Law and Dispute Resolution

  3. Case Laws

  4. Sample Lease Agreement

  5. Conclusion

  6. TLDR

Introduction

A commercial lease agreement is a crucial document that outlines the terms and conditions of the rental of a commercial property. It is essential for both the landlord and the tenant to have a clear understanding of their rights and obligations under the lease agreement.

Essential Clauses in a Commercial Lease Agreement

A comprehensive commercial lease agreement should include the following essential clauses:

2.1. Parties

  • Landlord/Lessor: The owner of the property who is granting the lease.

  • Tenant/Lessee: The individual or entity renting the property.

Source: Commercial Leases In Kenya – AMMLAW ↗

2.2. Premises

  • Legal Description: A detailed description of the property being leased, including its address, boundaries, and any specific features.

  • Floor Plan: A diagram showing the layout of the property, including the size and location of each room or area.

Source: Commercial Leases In Kenya – AMMLAW ↗

2.3. Term of Lease

  • Lease Period: The duration of the lease agreement, typically expressed in years or months.

  • Renewal Options: Provisions for renewing the lease at the end of the initial term, including any conditions or requirements for renewal.

Source: Commercial Leases In Kenya – AMMLAW ↗

2.4. Rent and Payment

  • Rental Amount: The monthly or annual rent payable by the tenant.

  • Payment Schedule: The dates and methods for rent payment.

  • Late Payment Penalties: Consequences for late rent payments, such as interest charges or other penalties.

Source: Commercial Leases In Kenya – AMMLAW ↗

2.5. Use of Premises

  • Permitted Use: The specific purposes for which the tenant can use the property.

  • Restrictions: Any limitations on the tenant's use of the property, such as operating hours, noise levels, or types of activities allowed.

Source: Commercial Leases In Kenya – AMMLAW ↗

2.6. Maintenance and Repairs

  • Landlord's Responsibilities: The landlord's obligations for maintaining the property, including structural repairs, common areas, and essential utilities.

  • Tenant's Responsibilities: The tenant's obligations for maintaining the property, such as keeping the premises clean, making minor repairs, and complying with safety regulations.

Source: Commercial Leases In Kenya – AMMLAW ↗

2.7. Insurance

  • Landlord's Insurance: The landlord's insurance coverage for the property, including liability insurance and property damage insurance.

  • Tenant's Insurance: The tenant's insurance coverage for their business operations, including liability insurance, property insurance, and business interruption insurance.

Source: Commercial Leases In Kenya – AMMLAW ↗

2.8. Default and Termination

  • Breach of Lease: The conditions under which either party can terminate the lease agreement, such as non-payment of rent, violation of lease terms, or failure to maintain the property.

  • Notice Requirements: The procedures for providing notice of termination, including the required timeframes and methods of communication.

Source: Commercial Leases In Kenya – AMMLAW ↗

2.9. Governing Law and Dispute Resolution

  • Governing Law: The jurisdiction whose laws will govern the lease agreement.

  • Dispute Resolution: The method for resolving any disputes that may arise between the landlord and the tenant, such as arbitration, mediation, or court proceedings.

Source: Commercial Leases In Kenya – AMMLAW ↗

Case Laws

  • Kenya Commercial Bank Ltd v. Mumias Sugar Company Ltd (2014) eKLR: This case involved a dispute over a lease agreement for a sugar factory. The court held that the lease agreement was valid and enforceable, and that the tenant was obligated to pay rent even if the factory was not operational. This case highlights the importance of having a clear and comprehensive lease agreement that outlines the rights and obligations of both parties.

Source: Kenya Commercial Bank Ltd v. Mumias Sugar Company Ltd (2014) eKLR ↗

  • Kenya Power & Lighting Company Ltd v. Kenya Pipeline Company Ltd (2015) eKLR: This case involved a dispute over a lease agreement for land used for a power substation. The court held that the lease agreement was valid and enforceable, and that the tenant was obligated to pay rent even if the substation was not operational. This case further emphasizes the importance of having a clear and comprehensive lease agreement that outlines the rights and obligations of both parties.

Source: Kenya Power & Lighting Company Ltd v. Kenya Pipeline Company Ltd (2015) eKLR ↗

Sample Lease Agreement

LEASE AGREEMENT

This Lease Agreement (the "Agreement") is made and entered into as of [Date] by and between [Landlord Full Name], residing at [Landlord Address] (the "Landlord"), and [Tenant Full Name], residing at [Tenant Address] (the "Tenant").

WITNESSETH:

WHEREAS, the Landlord is the owner of the commercial property located at [Property Address] (the "Premises"); and

WHEREAS, the Tenant desires to lease the Premises from the Landlord for the purpose of [Purpose of Lease];

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

1. Premises

The Landlord hereby leases to the Tenant, and the Tenant hereby leases from the Landlord, the Premises, together with all fixtures and appurtenances thereto belonging.

2. Term of Lease

The term of this Agreement shall be for a period of [Lease Term] commencing on [Start Date] and ending on [End Date] (the "Term").

3. Rent

The Tenant shall pay to the Landlord monthly rent in the amount of [Monthly Rent] (the "Rent"). The Rent shall be payable on the [Day] day of each month, commencing on [First Payment Date].

4. Use of Premises

The Tenant shall use the Premises solely for the purpose of [Permitted Use]. The Tenant shall not use the Premises for any other purpose without the prior written consent of the Landlord.

5. Maintenance and Repairs

The Landlord shall be responsible for the maintenance and repair of the Premises, including but not limited to the roof, foundation, plumbing, electrical systems, and heating and cooling systems. The Tenant shall be responsible for the maintenance and repair of the Premises, including but not limited to the interior of the Premises, the fixtures and appliances therein, and the landscaping.

6. Insurance

The Landlord shall maintain insurance on the Premises in the amount of [Insurance Amount]. The Tenant shall maintain insurance on its business operations, including but not limited to liability insurance, property insurance, and business interruption insurance.

7. Default and Termination

This Agreement may be terminated by either party upon the occurrence of any of the following events:

  • The Tenant's failure to pay the Rent when due.

  • The Tenant's breach of any of the terms and conditions of this Agreement.

  • The Tenant's abandonment of the Premises.

8. Governing Law and Dispute Resolution

This Agreement shall be governed by and construed in accordance with the laws of the Republic of Kenya. Any dispute arising out of or relating to this Agreement shall be settled by arbitration in accordance with the Arbitration Act, 1995.

9. Entire Agreement

This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous communications, representations, or agreements, whether oral or written.

10. Notices

All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered personally, sent by certified mail, return receipt requested, or sent by overnight courier service, addressed as follows:

If to the Landlord:

[Landlord Full Name] [Landlord Address]

If to the Tenant:

[Tenant Full Name] [Tenant Address]

11. Waiver

No waiver by either party of any breach of any provision of this Agreement shall be deemed a waiver of any subsequent breach of the same or any other provision.

12. Severability

If any provision of this Agreement is held to be invalid or unenforceable, such provision shall be struck from this Agreement and the remaining provisions shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

LANDLORD:

[Landlord Signature]

[Landlord Printed Name]

TENANT:

[Tenant Signature]

[Tenant Printed Name]

Conclusion

A well-drafted commercial lease agreement is essential for protecting the interests of both the landlord and the tenant. It should be comprehensive, clear, and unambiguous, and should address all relevant aspects of the lease relationship.

TLDR

A commercial lease agreement in Kenya should include details about the parties, the premises, the lease term, rent and payment, use of premises, maintenance and repairs, insurance, default and termination, and governing law and dispute resolution.

Answered by mwakili.com