Nevada Commercial Lease Agreement

Introduction

A Nevada commercial lease agreement is a legally binding contract used to formalize a lease arrangement between a commercial landlord and tenant. Commonly used for retail, industrial, or office space, the document outlines all the terms and conditions of the lease, including rent amount, lease duration, permitted use, renewal options, subleasing provisions, and more. ^[1]

Unlike residential leases governed by NRS Chapter 118A, commercial leases in Nevada are governed by NRS Chapter 118C, which provides significantly more flexibility for parties to negotiate terms. Commercial tenants are considered more sophisticated and are expected to understand and negotiate the terms of their leases. Importantly, Nevada law explicitly states that "a lease supersedes this section to the extent of any conflict," giving commercial lease terms priority over statutory defaults. ^[1]

Governing Law

Commercial tenancies in Nevada are governed by NRS Chapter 118C - Landlord and Tenant: Commercial Premises. This chapter is separate and distinct from NRS Chapter 118A, which governs residential dwellings. The rights and duties of residential landlords and tenants do NOT apply to commercial tenancies in most cases. ^[1]

Key differences between commercial and residential lease law in Nevada:

• No statutory cap on security deposits** (residential is limited to 3 months' rent)**
• No statutory return deadline for deposits** (residential requires 30 days)**
• Landlord self-help remedies permitted** (lock-out allowed with proper notice)**
• Lease terms supersede statutory provisions** where conflicts exist**

Types of Commercial Leases

Commercial leases are typically categorized by how operating expenses are allocated between landlord and tenant. The three primary types are:

1. Triple Net Lease (NNN)

In a triple net lease, the tenant pays the base rent PLUS all operating expenses. The "three nets" refer to: property taxes, property insurance, and common area maintenance (CAM). This is the most common type of commercial lease in Nevada, particularly for industrial and retail space.

CAM charges typically include: cleaning and routine repairs, utilities for common areas, landscaping and parking lot maintenance, snow removal, property management fees, HVAC maintenance, exterior lighting, and security services.

2. Gross Lease (Full Service)

In a gross lease, the landlord pays all operating expenses. The tenant pays only the base rent, which is typically higher to account for the landlord's expense obligations. The landlord maintains the general exterior structure, major systems (heating, plumbing, electrical), parking areas, and carries casualty insurance. The tenant typically must maintain personal liability insurance of at least $1,000,000 and name the landlord as an "also named insured."

3. Modified Gross Lease

In a modified gross lease, the landlord and tenant share operating expenses according to a negotiated allocation. This provides flexibility to customize expense responsibility based on property type, tenant needs, and market conditions. The lease agreement must clearly specify which party is responsible for each category of expense.

Required Disclosures

Nevada Duties Owed by a Licensee (Form 525)

When a real estate licensee acts as an agent in a commercial lease transaction, they must provide Form 525 "Duties Owed by a Nevada Real Estate Licensee" to each party. This disclosure is required under NRS 645.252. ^[2] The form must be presented before any documents are signed. ^[3]

The licensee's duties include:

• Confidentiality: Keeping personal and financial details confidential
• Obedience: Following client instructions (if legal and ethical)
• Loyalty: Prioritizing client's best interests
• Disclosure: Disclosing all material facts affecting decision-making
• Present all offers: Unless client waives this duty in writing

Key Lease Provisions

1. The Parties

The lease must identify the landlord and tenant with full legal names and mailing addresses. For business entities, include the entity type (LLC, Corporation, etc.) and state of formation.

2. Description of Leased Premises

The lease should include: street address, square footage, type of space (retail, office, industrial, etc.), and any additional description needed to identify the specific premises, including suite numbers or building identifiers.

3. Use of Leased Premises

The lease specifies what business activities are permitted. Options typically include: all purposes legal under law, or only specified purposes (with landlord's prior written consent required for changes). The permitted use clause is important for ensuring compliance with zoning regulations and protecting against undesirable tenant activities.

4. Term of Lease

The lease term specifies the duration of the lease, including the commencement date and expiration date. Commercial leases typically range from 1 to 10 years, with longer terms for larger tenants. The lease may include renewal options, typically requiring advance written notice.

5. Security Deposit

6. Rent

The lease specifies the monthly rent amount (Base Rent), due date, and payment method. Commercial leases may also include Percentage Rent, where the tenant pays a percentage of gross or net sales in addition to base rent. Percentage rent is common in retail leases and may be paid monthly, quarterly, or annually with proof of calculation.

7. Late Fees

The lease may specify late fees for delinquent rent payments. Options include: no late fee, flat fee (per occurrence or per day), or interest-based fee (annual rate applied per occurrence or per day). Late payments are typically applied first to the late fee, then to outstanding rent.

Landlord Rights and Remedies

Self-Help Remedy: Lock-Out Rights

Nevada is one of the states that permits landlord self-help remedies for commercial tenancies. Under NRS 118C.200, a landlord MAY change door locks on a tenant delinquent in paying rent WITHOUT court order if: ^[1]

1. Written notice is provided by certified mail at least 3 days before changing locks
2. A written notice is posted on the door stating where the new key may be obtained
3. The new key is provided during regular business hours ONLY if the tenant pays delinquent rent

Summary Eviction Procedures

NRS 40.2542 provides specific summary eviction procedures for commercial tenants. ^[4] When a commercial tenant is in default on rent:

1. Landlord serves a 5-day notice to pay rent or surrender premises
2. If tenant fails to comply, landlord files affidavit with justice or district court
3. Court may issue order directing removal within 24 hours
4. Tenant has right to contest by filing an affidavit and requesting hearing

Abandoned Property Disposal

Under NRS 118C.230, after a lease has been terminated, a landlord may dispose of abandoned personal property without liability if: (1) written notice of intent to dispose is mailed to the tenant by certified mail, return receipt requested; and (2) 14 days have elapsed since the notice was mailed. The lease may include different provisions that supersede this requirement. ^[1]

Tenant Rights and Remedies

Unlawful Lockout Remedies

If a landlord improperly locks out a commercial tenant (without following required procedures), NRS 118C.210 provides tenant remedies. ^[1] The tenant may:

• File a verified complaint for reentry in justice court
• Seek court order to restore access to premises
• Recover actual damages
• Recover 1 month's rent or $500, whichever is greater
• Recover reasonable attorney's fees and court costs
• Less any delinquent rents owed to landlord

Assignment and Subletting

In Nevada, a tenant typically needs the landlord's explicit written permission to assign the lease or sublet the premises. The lease agreement controls whether and under what conditions assignment or subletting is permitted. Key points:

• Written consent is typically required** from the landlord before any sublease**
• Consent cannot be unreasonably withheld** under general contract principles**
• Unauthorized subletting is a lease breach** and grounds for eviction**
• Landlord may reject unqualified subtenants (poor history, inability to pay)
• Some leases allow assignment to corporate affiliates without consent

Ada Compliance

The commercial lease should address:

• Whether the property currently complies with ADA requirements
• Who is responsible for any required retrofitting
• How future liability will be allocated between parties
• How compliance costs will be allocated

Generally, landlords are responsible for common areas and structural elements, while tenants are responsible for compliance within their leased space. However, both parties can be sued by third parties for ADA violations, regardless of lease allocation.

Business License Requirements

Commercial tenants operating a business in Nevada must obtain proper licensing. ^[6] Required licenses typically include:

• Nevada State Business License: $200 initial fee from the Secretary of State ^[6]
• Local/Municipal Business License: varies by location
• Sales/Use Tax Permit: if selling tangible property ^[7]
• Zoning Approval: from local planning division
• Fire Department Inspection: for commercial locations

Businesses must obtain a Federal Employer Identification Number (FEIN/EIN) before applying for state licenses. Nevada's SilverFlume portal (nvsilverflume.gov) can help determine licensing requirements.

Important Considerations

Insurance Requirements

Commercial leases typically require tenants to maintain liability insurance (commonly $1,000,000 minimum) and name the landlord as an additional insured. Landlords typically maintain property insurance on the building structure. The lease should clearly specify insurance requirements, who pays premiums, and what coverage is required.

Environmental Compliance

Tenants should conduct environmental due diligence before signing a commercial lease. The lease should address: responsibility for pre-existing contamination, tenant's obligations regarding hazardous materials, and indemnification for environmental claims.

Legal Advice Recommended

Because commercial lease terms generally take precedence over statutory protections, and because commercial tenants are considered sophisticated parties, it is advisable to consult with a Nevada real estate attorney before signing a commercial lease agreement. An attorney can help ensure that your interests are adequately protected and that you understand all obligations under the lease.