Indiana Commercial Lease Agreement

TABLE OF CONTENTS

1. Overview
2. Required Disclosures
3. Expense Structure Types
4. Key Agreement Sections
5. Security Deposits
6. Eviction and Notice Requirements
7. Termination Notice Requirements
8. ADA Compliance
9. Personal Guarantees
10. Resources

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1. OVERVIEW

An Indiana commercial lease agreement is a written contract governing the rental of a commercial property, such as retail, industrial, or office space. The agreement, which becomes legally binding once signed by both parties, includes provisions regarding the lease term, rent amount, security deposit, insurance requirements, renewal options, exclusivity, and the method of dividing expenses.

Standard lease terms include:

• Duration of the contract (lease term)
• Cost of rent and payment schedule
• Description of the property
• Insurance requirements
• Renewal options
• Method of dividing expenses
• Security deposit provisions
• Permitted uses of the premises

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2. REQUIRED DISCLOSURES

Indiana law requires the following disclosures in commercial lease agreements:

2.1 Flood Plain Disclosure

(Conditional) If the commercial property's lowest floor (including the basement) is situated at or below the federally recognized 100-year frequency flood elevation, this information MUST be disclosed in the rental agreement. ^[1]

2.2 Military Installation Disclosure

(Conditional) Tenants must be informed if their rental property is located near a military installation and may be impacted by military operations within a state area of interest. ^[2]

2.3 Real Estate Agency Relationship Disclosure

(Conditional) A licensed real estate broker or salesperson representing the tenant or landlord or acting as a limited agent must disclose their agency relationship to the other parties to the transaction. ^{[3] [4] [5]}

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3. EXPENSE STRUCTURE TYPES

Commercial leases typically use one of three expense structures:

3.1 Triple Net (NNN) Lease

Tenant pays for all operating expenses, including property taxes, insurance, and common area maintenance (CAM). The landlord receives "net" rent without deducting these costs.

3.2 Gross Lease

Landlord pays for all operating expenses. The tenant pays a flat rental amount, and the landlord is responsible for property taxes, insurance, and maintenance costs.

3.3 Modified Gross Lease

Operating expenses typically include: property taxes, insurance, common area maintenance, landscape maintenance, HVAC maintenance, and similar costs.

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4. KEY AGREEMENT SECTIONS

A comprehensive Indiana commercial lease agreement should include the following sections:

I. The Parties: Landlord and tenant identification with complete mailing addresses

II. Description of Leased Premises: Street address, square footage, type of space (retail, office, industrial), and other relevant descriptions

III. Use of Leased Premises: Permitted uses - either all purposes legal under law or specific purposes only. Changes typically require landlord's prior written consent

IV. Term of Lease: Initial term with specific commencement and expiration dates

V. Security Deposit: Amount required (if any), escrow requirements, and conditions for use and return

VI. Rent: Monthly base rent, due date, percentage rent options (if applicable), and payment frequency

VII. Late Fee: Grace period (if any), fee structure (flat fee or interest-based)

VIII. Expenses: Expense allocation based on lease type (triple net, gross, or modified)

IX. Insurance: Required coverage types and minimum amounts

X. Maintenance and Repairs: Allocation of maintenance responsibilities

XI. Default and Remedies: Conditions constituting default and available remedies

XII. Signatures: Execution by both parties with dates

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5. SECURITY DEPOSITS

5.1 Deposit Limits

Indiana does NOT impose a statutory limit on the maximum amount landlords can charge as a security deposit for commercial leases. Parties are free to negotiate the deposit amount, though one to two months' rent is common practice.

5.2 Return Requirements

Upon termination of the rental agreement, the landlord must return the security deposit (minus any lawful deductions) within 45 DAYS after termination of the rental agreement and delivery of possession. ^[6]

5.3 Itemization Requirement

Any deductions from the security deposit must be ITEMIZED IN WRITING and delivered to the tenant within the 45-day period.

5.4 Allowable Deductions

• Unpaid rent
• Outstanding utility bills (if tenant was responsible)
• Damages beyond normal wear and tear
• Other amounts owed under the lease

5.5 Prohibited Deductions

• General maintenance costs
• Normal wear and tear (worn carpets, slight wall discoloration, small nail holes)

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6. EVICTION AND NOTICE REQUIREMENTS

6.1 Notice Requirements by Situation

SITUATION | NOTICE REQUIRED | AUTHORITY

• |---------------------------|------------------

Non-payment of rent | 10 days to pay or quit | IC 32-31-1-6

Lease violations | Reasonable time to cure | Common law

Illegal/criminal activity | 45 days (no cure option) | IC 32-31-1

Month-to-month termination | 30 days | IC 32-31-1-1

Year-to-year termination | 90 days (3 months) | IC 32-31-1-3

6.2 When No Notice is Required

Under IC 32-31-1-8, landlords are not required to provide advance notice in these situations: ^[7]

• Both parties agreed to a specific rental period which has expired
• Tenant commits intentional property damage ("at-will waste")
• Tenant is unable or refuses to pay rent
• Tenant remains on the property after lease expiration ("holdover tenant")

6.3 Service Methods

Notices must be delivered by:

• Personal delivery to the tenant
• Registered or certified mail to the tenant's residence or place of business with return receipt requested

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7. TERMINATION NOTICE REQUIREMENTS

LEASE TYPE | NOTICE REQUIRED | AUTHORITY

• |------------------------------|------------------

Month-to-Month | 30 days | IC 32-31-1-1

Year-to-Year | 90 days before expiration | IC 32-31-1-3

Fixed Term | No notice (ends on specified date) | Contract terms

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8. ADA COMPLIANCE

8.1 Shared Responsibility

8.2 General Division of Responsibilities

Landlord typically responsible for:

• Building structure and systems
• Common areas, hallways, lobbies
• Parking facilities
• Exterior accessibility

Tenant typically responsible for:

• Issues within tenant's exclusive control
• Interior modifications and fixtures
• Tenant-installed equipment and signage

8.3 Physical Standards (2010 ADA Standards)

• Doorways: 32-48 inches clear width
• Ramps: Maximum 1:12 slope
• Bathrooms: 30" x 48" clear floor space minimum
• Signage: Matte finish, 70% contrast, braille required for permanent spaces

8.4 Penalties for Non-Compliance

The Department of Justice can impose fines:

• First violation: Up to $75,000
• Subsequent violations: Up to $150,000

8.5 Recommended Lease Provisions

Commercial leases should address:

• Representations whether property currently complies with ADA
• Allocation of retrofitting responsibility
• Future liability allocation between parties
• Compliance cost allocation

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9. PERSONAL GUARANTEES

9.1 Purpose

A personal guarantee makes an individual (typically the business owner) personally liable for lease obligations if the business entity defaults. This provides landlords additional security beyond the business entity's assets.

9.2 Key Elements

• Identification of parties: Names of tenant, landlord, and guarantor(s)
• Scope of guarantee: What's covered (rent, fees, damages, maintenance)
• Limitation provisions: Cap on amount and/or duration
• Joint or several liability: Whether guarantors are individually or collectively liable
• Release mechanics: Conditions for release from guarantee

9.3 Negotiation Considerations

• Set a monetary cap on guarantee amount
• Limit duration (e.g., initial term only)
• Add sunset or step-down provisions
• Include release triggers (assignment, expiry, on-time payment history)
• Specify whether guarantee survives lease renewal

9.4 Enforceability

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10. RESOURCES

The following sources were consulted in the preparation of this document. All statutory citations are current as of November 2025.

10.1 Indiana Statutes Cited

REF | CITATION | DESCRIPTION | URL

• |-------------------|------------------------------------------|----------------------------------------

^[1] | IC 32-31-1-21 | Flood Plain Disclosure | https://iga.in.gov/laws/2024/ic/titles/32#32-31-1-21

^[2] | IC 32-31-1-21.1 | Military Installation Disclosure | https://iga.in.gov/laws/2024/ic/titles/32#32-31-1-21.1

^[3] | IC 25-34.1-10-10 | Real Estate Agency Disclosure (Broker) | https://iga.in.gov/laws/2024/ic/titles/25#25-34.1-10-10

^[4] | IC 25-34.1-10-11 | Real Estate Agency Disclosure (Salesperson) | https://iga.in.gov/laws/2024/ic/titles/25#25-34.1-10-11

^[5] | IC 25-34.1-10-12 | Limited Agent Disclosure | https://iga.in.gov/laws/2024/ic/titles/25#25-34.1-10-12

^[6] | IC 32-31-3-12 | Return of Security Deposits | https://iga.in.gov/laws/2024/ic/titles/32#32-31-3-12

^[7] | IC 32-31-1-8 | Termination Without Notice | https://iga.in.gov/laws/2024/ic/titles/32#32-31-1-8

^[8] | Botosan v. Paul McNally Realty | ADA Shared Liability (9th Cir. 2000) | https://caselaw.findlaw.com/court/us-9th-circuit/1446766.html

10.2 Additional Resources

• Indiana General Assembly: https://iga.in.gov/laws/
• 2010 ADA Standards for Accessible Design: https://www.ada.gov/law-and-regs/design-standards/2010-stds/
• ADA National Network: https://adata.org/
• Indiana State Government: https://www.in.gov/

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DISCLAIMER

We strongly recommend consulting with a licensed Indiana attorney before entering into any commercial lease agreement. An attorney can help you understand your rights and obligations, negotiate favorable terms, and ensure compliance with all applicable laws.

Document generated: November 27, 2025