What Do You Need to Know About the California Association of Realtors Commercial Lease Agreement? 

03.01.24 06:39 PM Comment(s) By Assetsoft 3



The California Association of Realtors (C.A.R.) is a professional organization representing real estate agents and brokers in the state of California. 


It has become America’s most influential and most prominent real estate association since it was founded in 1905.  


The primary purpose of C.A.R. is to serve the real estate industry by promoting and protecting the interests of its members. Not just that, the association is also known for producing real estate forms that include mainly used contracts and agreements streamlining transactions in the California real estate market. 


One such crucial document is the ‘California Association of Realtors Lease Agreement,’ which we will discuss in this article. 


What is C.A.R.’s Commercial Lease Agreement? 

This legal document is basically an agreement that is designed to safeguard the interests of both parties, landlords and tenants. It is protected by U.S. copyright laws and is meant for your individual use in your real estate transactions only. Any unauthorized use of the C.A.R. forms is forbidden. 


It is a written contract conveying the terms and conditions of tenancy. Both parties can negotiate the agreement and conclude on a lease term and base rent. 


Here are some key points that are covered in the California Association of Realtors commercial lease agreement


1. Parties Involved 


The agreement starts with the identification of both parties involved, i.e. the landlord and the tenant. It requires their legal identification, including their legal names and addresses.  


2. Property Description 

Next, there is a proper description of the property. It includes the address, specific unit, area of the rentable space, and other related details. The purpose is to clarify the exact location of the rented space and any further description. 


3. Lease and Renewal or Extension Terms 

The agreement mentions the lease term specifying the starting and ending dates of the agreement. The provisions of the lease renewal options are also provided. It also states that any party can terminate the agreement for some reason. But, a 30 days prior notice is must. 

4. Rent and Payment Details 


This section deals with the rental amount that the tenant agrees to pay as the base rent. It is clearly mentioned in the agreement that any amount of rent is settled for the first 12 months. From the 13th month, rent is adjusted according to any changes in the U.S. price index. 


It also includes details about the late fees, acceptable payment methods, and penalties in case of bounced cheques. 



5. Security Deposit 

The tenant is usually supposed to provide a security deposit on any commercial lease agreement. The landlord keeps the amount to cover any sort of damages or unpaid rent. 


It also states the condition where the deposit can be withheld and processed for its return. 


6. Use of Premises Space 

This section deals with the specific permitted use of the leased property. There could be some specific restrictions on the use and modifications to the property. It also outlines certain business activities allowed on that property. 


7. Repair and Maintenance 

To avoid any misunderstandings and conflicts on property maintenance, this section clearly defines the responsibilities of both the landlord and the tenant. 

 It is to be specified on the agreement which party will be held responsible for any damage repairs, regular maintenance, and related expenses. 


8. Insurance 

There can be a provision of insurance while signing the lease agreement. Tenants are required to carry liability insurance or sometimes property insurance. This helps protect the interests of both parties in case of any damages or accidents. 


9. Termination  

The agreement specifies the conditions under which any party can terminate the lease contract. Options for contract renewal are also stated there. It also states the solutions available to the non-defaulting party in case of any default conducted. 


10. Other Provisions 

Some additional provisions can also be included in the lease agreement regarding the needs of both parties. These could be matters of subleasing, signage rights, dispute resolution mechanisms, or any other negotiation between them. 


11. Compliance with Laws 

The commercial lease agreement states a clause that requires both parties to comply with all federal, state, and local laws relating to any commercial property use. 



The California Association of Realtors Commercial Lease Agreement is a legal document prepared to establish the terms and conditions of rental commercial properties in California. It covers several aspects, including the identity of both parties, the address of the rental property, lease duration, rental payment terms, security, responsibilities, conditions of termination, and specific other provisions.  


Here is an example of how this commercial lease agreement is filled.  


Both the landlord and the tenant need to review all the conditions mentioned in the agreement before signing to avoid any conflicts in the future. They can also consult with any legal advisor.

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