Create Your Ohio Commercial Lease Agreement
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Ohio Commercial Lease Agreement
Overview
An Ohio commercial lease agreement is a legally binding contract between a property owner (landlord/lessor) and an individual or business entity (tenant/lessee) for the rental of commercial space. The agreement outlines all terms and conditions of the lease, including its duration, rent amount, security deposit, option for renewal, expense allocation, and permitted uses of the premises.
Once signed by both parties, the agreement is legally binding. Commercial leases are particularly important because they establish the framework for business operations in a physical location, often for extended periods ranging from three to ten years or more.
Standard lease terms include:
Duration of the lease term
Rent amount and payment schedule
Description of the commercial property
Security deposit requirements
Renewal and extension options
Expense allocation method (NNN, Gross, Modified)
Insurance requirements
Permitted uses of the premises
Assignment and subletting restrictions
Default provisions and remedies
Condition of premises at delivery
Legal Framework
Note: Critical Distinction: Unlike residential leases, which are heavily regulated by Ohio Revised Code Chapter 5321, commercial leases in Ohio are governed primarily by contract law and common law principles. This means commercial tenants have fewer statutory protections but greater freedom to negotiate terms. [1]
Key legal sources governing Ohio commercial leases:
Ohio Revised Code Chapter 1310 - Leases (general lease provisions)
Ohio Revised Code Chapter 1923 - Forcible Entry and Detainer (eviction procedures)
Ohio Revised Code Chapter 4735 - Real Estate Brokers (agency disclosure requirements)
Common law principles of contract interpretation
Local municipal zoning ordinances
Because commercial leases are governed by contract rather than statute, risk is allocated entirely by negotiation. There is no legal safety net like there is in residential leasing. Businesses must read carefully, negotiate wisely, and consult counsel. [2]
Statute of Frauds: Under Ohio law, a lease agreement can be either written or oral and is enforceable in a court of law. However, to ensure enforceability and clarity of terms, commercial leases should always be in writing, signed by both parties.
Required Disclosures
Ohio law requires certain disclosures in commercial lease transactions:
Agency Disclosure Statement
*(Conditional - When Real Estate Licensee Involved) *If a licensed real estate agent (licensee) represents a party to a real estate transaction, the licensee and all parties to the transaction must sign and date a statement disclosing the nature of the licensee's agency relationship. [3]
The agency disclosure statement must include:
Names of all parties in the transaction (unless confidential)
Address of the real estate being leased
Name of the licensee(s) and brokerage affiliation
The party each licensee represents in the transaction
Whether licensees from the same brokerage are acting as dual agents
The source of compensation to the real estate broker
Notice that client does not have to consent to dual agency
Timing: A licensee working with a potential lessee shall present the agency disclosure statement and request signature no later than the preparation of an offer to lease. [4]
Note: *Note: *If no real estate licensee is involved in the transaction (e.g., direct negotiation between landlord and tenant), this disclosure is not required.
Expense Structure Types
Commercial leases in Ohio typically use one of three expense structures. The expense structure determines which party pays for operating costs such as property taxes, insurance, common area maintenance, landscape maintenance, HVAC maintenance, and utilities.
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.
Key characteristics:
Most common structure for freestanding retail and industrial properties
Typical lease terms of 10-15 years with rent escalations
Tenants should negotiate expense caps (often 5-10% annual increase)
Lower base rent compared to gross leases
Pro-rata share calculated based on percentage of total building leased
Gross Lease (full Service)
Landlord pays for all operating expenses. The tenant pays a single, flat rental amount, and the landlord is responsible for property taxes, insurance, and maintenance costs.
Key characteristics:
Common in multi-tenant office buildings
Simpler budgeting for tenants (predictable monthly costs)
Higher base rent than NNN leases
Landlord bears risk of expense increases
Modified Gross Lease
Landlord and tenant share expenses according to negotiated terms. This hybrid structure combines elements of both gross and net leases.
Key characteristics:
Base year expenses typically included in initial rent
Increases over base year passed to tenant (pro-rata share)
Commonly used in office buildings
Allows flexible allocation of expense responsibilities
Specific allocations must be clearly defined in the lease
Key Agreement Sections
A comprehensive Ohio commercial lease agreement should include the following provisions:
Parties and Property
Full legal names of landlord and tenant
Complete property address and legal description
Square footage of leased premises
Common areas included in the lease
Condition of premises at delivery
Term and Rent
Lease commencement and expiration dates
Base rent amount and payment schedule
Rent escalation provisions (annual increases, CPI adjustments)
Late fee provisions
Grace period for rent payment
Security deposit amount and conditions for return
Permitted Use
Note: The lease should clearly state the specific business activities permitted on the premises. Important: Verify that the intended use complies with local zoning ordinances before signing the lease. Tenants should request a use clause that is broad enough to accommodate potential business changes.
Maintenance and Repairs
Tenant responsibilities (interior maintenance, fixtures, trade equipment)
Landlord responsibilities (structural elements, roof, exterior walls)
HVAC maintenance allocation
Procedures for requesting repairs
Timeline for landlord response to repair requests
Alterations and Improvements
Address whether tenant may make alterations, what approvals are required, who pays for improvements, and who owns improvements at lease end. Define "trade fixtures" that tenant may remove.
Security Deposits
Key Point: Ohio law does NOT impose statutory limits on commercial security deposits. The residential security deposit rules in ORC Section 5321.16 (requiring interest on deposits exceeding $50 or one month's rent, and 30-day return requirement) apply only to residential tenancies. [5]
Commercial security deposit considerations:
Amount is fully negotiable between parties
No statutory requirement for interest or escrow
Return timeline governed by lease terms (not statute)
Landlords commonly request 1-3 months' rent
Letter of credit may be used in lieu of cash deposit
Deposit may be applied to rent default or property damage
Conditions for return should be clearly specified in lease
Eviction and Default
Ohio's eviction procedures are outlined in Ohio Revised Code Chapter 1923 (Forcible Entry and Detainer). Commercial evictions differ significantly from residential evictions. [6]
Notice Requirements
Under ORC Section 1923.04, a party desiring to commence an eviction action must notify the adverse party to leave the premises three (3) or more days before beginning the action. Notice may be given by:
Certified mail, return receipt requested
Personal delivery (handing written copy to defendant)
Leaving at defendant's usual place of abode or the leased premises
Self-Help Remedies
Note: Important: Unlike residential evictions, Ohio law permits commercial landlords to use "self-help" eviction methods (such as changing locks) if:
The tenant is clearly in default
The written lease itself allows for such a remedy
All notice and right to cure provisions have been provided and expired
The eviction can be accomplished without disturbing the peace
*Caution: *Self-help should only be used when the tenant is clearly in default. If the landlord's claim is marginal, judicial eviction through forcible entry and detainer is the safer approach. [7]
Available Landlord Remedies
When a tenant defaults under a commercial lease, the landlord may pursue:
Forcible entry and detainer action under ORC Section 1923.02
Self-help eviction (if permitted by lease and conditions met)
Rent acceleration (collecting remaining rent due under lease)
Pursuit of security deposit
Damages for breach of lease
Recovery of attorney's fees (if provided in lease)
Duty to Mitigate: Ohio law recognizes the validity of non-punitive rent acceleration clauses, but also imposes a duty on landlords to mitigate damages by making reasonable efforts to re-let the property.
Assignment and Subletting
Ohio does not have specific statutes governing commercial subletting or assignment. These matters are governed entirely by the terms of the lease agreement.
Standard provisions:
Prior written consent of landlord typically required
Landlord may not unreasonably withhold consent (if so stated)
Original tenant remains liable unless expressly released
Landlord has 30 days to respond to subletting request
If landlord fails to respond within 30 days, consent may be implied
Unauthorized subletting may constitute breach of lease
Key Consideration: The original tenant typically remains responsible for collecting rent from any subtenant and ensuring timely payment to the landlord. The lease agreement remains in the original tenant's name.
Insurance Requirements
Ohio does not mandate commercial property insurance by law, but insurance requirements are typically specified in the lease agreement and may be practically mandatory for most operations.
Common Insurance Requirements
Commercial General Liability (CGL): Minimum $1,000,000 per occurrence, $2,000,000 aggregate
Property Insurance: Coverage for tenant's personal property and trade fixtures
Workers' Compensation: Required by Ohio law if tenant has employees
Business Interruption Insurance: Recommended but not typically required
Additional Insured Requirements
Landlords typically require:
Landlord named as additional insured on tenant's liability policy
Certificate of insurance on ACORD-25 (liability) and ACORD-27 (property) forms
30-day notice to landlord before policy cancellation
Annual renewal certificates provided to landlord
Expense Allocation by Lease Type
Triple Net (NNN): Tenant pays for all insurance, including building insurance.
Gross Lease: Landlord pays for building insurance; tenant covers personal property.
Modified Gross: Insurance allocation negotiated per lease terms.
Ada Compliance
The Americans with Disabilities Act (ADA) applies to commercial properties in Ohio. Both landlords and tenants share legal responsibility for ADA compliance. [8]
Shared Responsibility
The ADA places legal obligation on both the landlord and tenant to remove barriers and provide auxiliary aids and services. While the lease may allocate who makes changes and provides aids, both parties remain legally responsible to the public.
Note: *Important: *Lease clauses stating that tenants are responsible for all legal compliance do NOT shield landlords from third-party ADA lawsuits.
Typical Allocation
Landlord: Common areas, building infrastructure, exterior accessibility
Tenant: Interior of leased space, fixtures, and accessibility within premises
Shared: Multi-tenant property areas may require coordination
Penalties
Non-compliance with ADA can result in:
Civil penalties up to $75,000 for first violation
Up to $150,000 for subsequent violations
Private lawsuits by individuals denied access
Injunctive relief requiring modifications
Environmental Considerations
Under environmental and tort law, a landlord can be held liable for environmental contamination caused by a tenant. Ohio commercial lease agreements should include provisions addressing environmental compliance and liability.
Recommended provisions:
Prohibition on storage or use of hazardous materials without consent
Tenant responsibility for compliance with environmental laws
Indemnification for environmental damage caused by tenant
Right of landlord to conduct environmental inspections
Requirements for reporting environmental incidents
Remediation responsibilities upon lease termination
Termination and Renewal
Lease Termination
Commercial leases may terminate by:
Expiration of the lease term
Mutual agreement of the parties
Breach by either party (subject to cure period)
Early termination clause (if included)
Condemnation or destruction of premises
Bankruptcy (subject to lease and bankruptcy law provisions)
Renewal Options
Common renewal provisions include:
Option to renew for specified additional term(s)
Notice period for exercising renewal (typically 6-12 months)
Rent adjustment method for renewal term (market rate, CPI, fixed increase)
Right of first refusal for additional space
Holdover provisions if tenant remains after expiration
Resources and Citations
- Ohio Revised Code Chapter 5321 - Landlords and Tenants
- Ohio Revised Code Chapter 1310 - Leases
- Ohio Revised Code Section 4735.57 - Agency Disclosure Statement
- Ohio Revised Code Section 4735.58 - Timing of Agency Disclosure
- Ohio Revised Code Section 5321.16 - Security Deposit Procedures (Residential)
- Ohio Revised Code Chapter 1923 - Forcible Entry and Detainer
- Ohio Revised Code Section 1923.04 - Notice Requirements for Eviction
- ADA National Network - Commercial Lease ADA Compliance
- Ohio Real Estate Commission - Agency Disclosure Form
Disclaimer
IMPORTANT: This document is provided for informational purposes only and does not constitute legal advice. Commercial lease agreements involve significant legal and financial obligations. Before entering into any commercial lease agreement, you should:
Consult with a licensed Ohio attorney experienced in commercial real estate
Have the lease reviewed by legal counsel before signing
Verify all zoning and permitted use requirements with local authorities
Conduct appropriate due diligence on the property and landlord
Review current Ohio statutes, as laws may change
The information in this document is current as of December 2025 and is based on Ohio Revised Code and applicable federal law. Laws and regulations may have changed since this document was created. Always verify current requirements with appropriate legal counsel.
This document was generated using information from publicly available sources including the Ohio Revised Code, ADA National Network, and authoritative legal resources. All citations link to official government sources where available.