Idaho Commercial Lease Agreement

Introduction

An Idaho commercial lease agreement outlines the terms and conditions of an arrangement between a landlord and a business tenant for the commercial use of a property. It is commonly used for leasing storefronts, office space, warehouses, and industrial facilities, and includes provisions about rent, security deposits, lease term, permitted use, maintenance responsibilities, and more.

Idaho Legal Framework for Commercial Leases

Key Statutes

Commercial leases in Idaho are governed by several areas of law:

Idaho Code Title 6, Chapter 3 - Unlawful Detainer: Governs eviction procedures for both commercial and residential properties. ^[9]

Idaho Code Title 55, Chapter 3 - Rental Agreements: Addresses general landlord-tenant matters, though many provisions focus on residential tenancies. ^[8]

Idaho Code Title 54, Chapter 20 - Real Estate License Law: Applies when real estate licensees are involved in the transaction. ^[1]

Commercial Vs. Residential Leases

Unlike residential leases, commercial leases in Idaho have fewer statutory protections for tenants. Key differences include:

Security Deposits: While Idaho Code Section 6-321 addresses residential security deposits, commercial security deposit terms are governed primarily by the lease agreement. ^[7]

Property Removal After Eviction: Commercial tenants have 7 days to remove personal property after eviction, compared to 72 hours for residential tenants. ^[5]

Implied Warranties: Commercial leases have fewer implied warranties of habitability than residential leases.

Negotiability: Greater freedom to negotiate all terms, including remedies, default provisions, and liability allocations.

Required Disclosures

When a real estate licensee (broker or agent) is involved in a commercial lease transaction, Idaho law requires specific disclosures:

Agency Disclosure Brochure

At their first substantial business contact, a licensee must provide a prospective client with the Agency Disclosure Brochure adopted by the Idaho Real Estate Commission. ^[1] The current brochure is effective July 1, 2025. ^[2]

This brochure explains:

The types of representation available (Single Agency, Limited Dual Agency, Nonagent)

The duties owed to customers vs. clients

That no agency relationship exists without a written agreement

Representation Confirmation and Acknowledgment of Disclosure

If a licensee is involved in a real estate transaction, a Representation Confirmation and Acknowledgment of Disclosure must be signed by the parties involved before or at the time of the lease agreement. ^[1] This document confirms the relationship between the landlord, tenant, and any licensees involved.

Types of Commercial Lease Structures

Commercial leases typically fall into three main expense structure categories based on how operating expenses are allocated between landlord and tenant:

Gross Lease (full Service Lease)

In a gross lease, the landlord pays for all operating expenses. The tenant pays a fixed rent amount, and the landlord is responsible for:

Property taxes

Property insurance

Common area maintenance

Building maintenance and repairs

Utilities (sometimes)

Triple Net Lease (Nnn)

In a triple net lease, the tenant pays the base rent plus all operating expenses, including:

Property taxes (first "N")

Property insurance (second "N")

Common Area Maintenance/CAM (third "N")

CAM charges typically include landscape maintenance, parking lot maintenance, HVAC maintenance, snow/ice removal, and general repairs to common areas.

Modified Gross Lease

A modified gross lease is a hybrid where the landlord and tenant share operating expenses according to negotiated terms. The lease should clearly specify which party is responsible for each expense category.

Essential Lease Provisions

A comprehensive Idaho commercial lease agreement should include the following provisions:

Parties and Premises

Full legal names and contact information for landlord and tenant

Complete property address and description

Square footage of leased space

Type of space (retail, office, industrial, warehouse)

Lease Term

Start date and end date

Renewal options and terms

Early termination provisions

Rent

Base rent amount and payment schedule

Due date for monthly payments

Acceptable payment methods

Rent escalation clauses (annual increases)

Percentage rent (for retail tenants based on sales)

Security Deposit

Idaho does not impose statutory limits on security deposit amounts. ^[3] The lease should specify:

Amount of deposit

Conditions for deductions

Return timeline

Interest provisions (if any)

Permitted Use

Specific permitted business activities

Exclusive use provisions (protecting tenant from competing businesses)

Prohibited uses

Compliance with zoning laws

Late Fees

Idaho does not statutorily regulate late fees for commercial leases. The lease may specify:

Grace period before late fee applies

Flat fee per occurrence or per day

Interest-based penalties

Maintenance and Repair Responsibilities

Clear allocation of maintenance responsibilities is essential in commercial leases. Typical divisions include:

Landlord Responsibilities (Typical)

Structural elements (roof, foundation, exterior walls)

Common areas

Major building systems (under gross lease)

Capital improvements

Tenant Responsibilities (Typical)

Interior maintenance and repairs

Trade fixtures and equipment

HVAC maintenance (often in NNN leases)

Janitorial services

Ada Compliance Requirements

Commercial properties must comply with the Americans with Disabilities Act (ADA) Title III requirements, which prohibit disability discrimination in places of public accommodation. ^[6]

Key Ada Requirements

Accessible entrances and pathways (minimum 36 inches wide)

Wheelchair-accessible parking (1 per 25 regular spaces, with at least one van-accessible)

Accessible restrooms in public areas

Reasonable modifications for disabled individuals

Liability Allocation

Both landlords and tenants may be held liable for ADA violations under joint and several liability. The lease should clearly specify:

Which party is responsible for structural ADA compliance

Which party is responsible for interior ADA compliance

Indemnification provisions for ADA-related claims

Penalties: Civil penalties for ADA violations can be up to $75,000 for first violations and $150,000 for subsequent violations.

Default and Eviction Procedures

Idaho's unlawful detainer statute (Idaho Code Section 6-303) governs eviction procedures for commercial properties. ^[4]

Grounds for Eviction

Nonpayment of rent

Violation of lease terms

Holdover after lease expiration

Unlawful use of premises (e.g., controlled substances)

Waste or damage to property

Notice Requirements

For Nonpayment of Rent: 3-day notice to pay or vacate. The notice must state the amount owed and give the tenant 3 days to pay.

For Lease Violations: 3-day notice to cure or vacate. The notice must specify the violation and give the tenant 3 days to remedy.

For Drug Activity: Eviction proceedings may begin immediately without a cure period.

Eviction Timeline

Notice period expires (3 days for nonpayment/violation)

Landlord files unlawful detainer complaint in district court

Expedited trial 5-12 days after filing (for nonpayment cases)

Court issues writ of restitution if landlord prevails

Commercial tenant has 7 days to remove property after writ is posted ^[5]

Assignment and Subletting

Unless the lease prohibits it, tenants in Idaho may assign or sublet their leased space. ^[3] However, most commercial leases include provisions requiring landlord consent.

Key Points:

Assignment: Transfers all of the tenant's rights and obligations under the lease to a new party.

Subletting: Creates a sub-tenancy where the original tenant remains liable under the main lease.

Original Tenant Liability: Even after subletting, the original tenant typically remains responsible for lease obligations unless expressly released by the landlord.

Insurance Requirements

Commercial leases typically require specific insurance coverage from both parties:

Tenant Insurance (typically Required)

Commercial General Liability (minimum $1,000,000 per occurrence)

Property insurance for tenant's fixtures, equipment, and inventory

Business interruption insurance (recommended)

Workers' compensation (if tenant has employees)

Landlord Insurance (typically Maintained)

Building/structure insurance

Common area liability

Loss of rents coverage

Common Lease Insurance Provisions

Landlord named as "additional insured" on tenant's policy

Certificate of insurance required before occupancy

Waiver of subrogation clauses

Notice requirements for policy cancellation

Lease Termination and Renewal

Termination Options

Expiration: Lease ends at the stated termination date. No notice required unless specified in lease.

Early Termination: May be permitted under specific conditions stated in the lease (e.g., relocation clause, kick-out clause).

Mutual Agreement: Both parties can agree to terminate early with a lease termination agreement.

Renewal Options

Lease renewal terms should specify:

Number of renewal terms available

Length of each renewal term

Notice required to exercise renewal option

Rent adjustment formula for renewal periods

Holdover Tenancy

If a tenant remains in possession after lease expiration without a new agreement, they become a holdover tenant. ^[3] The landlord may:

Accept rent and create a month-to-month tenancy

Begin eviction proceedings

Negotiate a new lease