Create Your Tennessee Commercial Lease Agreement
1
2
3
TENNESSEE COMMERCIAL LEASE AGREEMENT
Tennessee Commercial Lease Agreement
A Tennessee commercial lease agreement is a binding contract between a landlord and a business tenant for the rental of commercial property, such as retail, industrial, or office space. The document outlines all aspects of the lease arrangement, including the monthly rent price, security deposit, lease term, and landlord policies.
Unlike residential leases, commercial leases in Tennessee are subject to fewer statutory protections, giving parties greater flexibility to negotiate terms. However, certain disclosure requirements and legal considerations still apply, as detailed in this comprehensive guide.
Types of Commercial Leases
Commercial leases are typically categorized by how operating expenses are allocated between landlord and tenant:
Triple Net Lease (Nnn)
The tenant pays all operating expenses in addition to base rent, including:
Property taxes
Property insurance
Common area maintenance (CAM)
Landscape and HVAC maintenance
Repairs and utilities
Gross Lease (full Service)
The landlord pays all operating expenses, and the tenant pays a single, all-inclusive rent amount. This provides predictable costs for tenants but typically results in higher base rent.
Modified Gross Lease
The landlord and tenant share operating expenses according to negotiated terms. Common variations include the tenant paying utilities and janitorial while the landlord covers property taxes and insurance.
Required Disclosures
Commercial Lease Disclosure Statement
Under Tennessee Code [1], at the request of a prospective tenant, landlords must provide a signed disclosure statement for:
Commercial property of 1,500 square feet or less
Industrial real property of 5,000 square feet or less
The disclosure must detail the extent to which the property complies with applicable:
State and local fire codes
Plumbing codes
Electrical codes
Note: Important: If any information is unknown or unavailable to the owner at the time of disclosure, the owner may state that such information is unknown.
Remedies for Misrepresentation
If a landlord knowingly makes a misrepresentation in the disclosure statement, the tenant may bring an action for actual damages [2]. Key points:
Claims must be filed within ONE YEAR of receiving the disclosure OR the date of occupancy, whichever occurs first
Action is available for damages from known defects existing at lease execution
Other remedies at law or equity remain available for intentional or willful misrepresentation
Licensee Agency Status Disclosure (Optional)
Under Tennessee Code [3], commercial lease transactions are exempt from the written agency disclosure requirements that apply to residential transactions. However, it is still recommended that real estate licensees involved in commercial lease transactions disclose their agent status to all parties as a best practice.
Security Deposits
Note: Unlike residential leases, Tennessee does not regulate commercial lease security deposits. This means:
No statutory limit on deposit amounts
No required timeline for returning deposits
No prohibition on comingling deposits with other funds
No mandatory interest payments on deposits
Note: Important: The residential security deposit rules under TN Code § 66-28-301 explicitly do NOT apply to commercial leases. All terms regarding security deposits should be clearly negotiated and documented in the lease agreement.
Recommended Lease Provisions
Specific deposit amount
Conditions for deductions
Timeline for return after lease termination
Interest accrual (if any)
Transfer provisions if property is sold
Subleasing and Assignment
Tennessee has no explicit statutes governing commercial subleasing. The terms of the lease agreement control entirely.
General Rules
Landlord consent is typically required for any sublease or assignment
Consent requirements must be in writing
If the lease is silent, tenants should still seek written permission
Landlords may screen potential subtenants
Common Exceptions
Many commercial leases allow assignment without landlord consent to:
A corporation with which the tenant merges
Any subsidiary of the tenant
Any corporation under common control with the tenant
A purchaser of substantially all of the tenant's assets
Consequences of Unauthorized Subletting
If a tenant subleases without proper written consent:
The tenant is in breach of the lease
The landlord may evict both tenant and subtenant
The landlord may sue for damages
Default and Eviction
Standard Eviction Process
The Tennessee commercial eviction process follows these steps:
Step 1: Landlord provides written notice of default
Step 2: If not cured, landlord files detainer warrant with the court
Step 3: Court hearing is held
Step 4: If landlord prevails, court issues writ of possession
Court Filing Options
Average Timeline: The Tennessee eviction process typically takes 4-8 weeks.
New Law: Sb 0292 (effective July 1, 2025)
Tennessee Senate Bill 0292 provides a faster process for removing unauthorized occupants from commercial property:
Property owner can file complaint directly with sheriff
Sheriff serves notice to vacate within 24-72 hours
Applies ONLY to unauthorized occupants (not lease-holding tenants)
Excludes: current/former tenants with valid leases, family members of owner, pending litigation
Important Restrictions
**Self-help eviction is prohibited. **Under Tennessee law, landlords may not repossess or lock out a tenant without first obtaining a writ of possession through the court. This requirement serves to prevent breaches of the peace.
Ada Compliance
The Americans with Disabilities Act (ADA) imposes significant obligations on commercial property [4].
Shared Liability
Critical: Both landlord AND tenant can be held liable to third parties for ADA violations, regardless of lease terms. The lease only allocates responsibility between the parties—it does not limit liability to outsiders.
Title Iii Requirements
Barrier removal required for existing structures
New construction (after January 26, 1993) must meet accessibility standards
Reasonable modifications must be made when readily achievable
Penalties for Non-Compliance
First offense: Up to $75,000
Subsequent violations: Up to $150,000
Private lawsuits by affected individuals
Recommended Lease Provisions
Current ADA compliance status of property
Responsibility for required retrofitting
Allocation of future compliance costs
Indemnification provisions
The Tennessee Human Rights Commission [5] also enforces state disability discrimination laws.
Zoning and Permits
Before signing a commercial lease, tenants should verify zoning compliance and permit requirements.
Use and Occupancy Permits
Most Tennessee jurisdictions require a Use and Occupancy Permit (U&O) before a business can occupy commercial space. Key points:
A business license does NOT exempt you from U&O requirements
Failure to obtain proper permits can result in mandatory relocation
Check with local planning department before signing lease
Conditional Use Permits
If the property is not properly zoned for your intended use, you may request:
Zoning variance
Conditional use permit
Zoning change
Filing fees vary by municipality and can range from several hundred to several thousand dollars.
Non-Conforming Uses
Under Tennessee Code § 13-7-208 [6], commercial establishments that existed legally before a zoning change may:
Continue operating as a non-conforming use
Expand on the existing property
Tear down and rebuild structures (if space permits)
Lease Recording
Commercial leases may be recorded with the County Register of Deeds [7] to provide constructive notice to subsequent purchasers.
Recording Requirements
Document must be properly authenticated (signature acknowledged)
Paper size: 8.5" x 11" or 8.5" x 14"
White paper, at least 20-pound weight
Must include name and address of preparer
Filing Fees
$5.00 per page (minimum $10.00)
Additional $2.00 processing fee per document
Electronic submissions may incur additional $2.00 fee
Multi-County Properties
If the leased property is situated in two or more counties, the lease may be recorded in either county. For multiple separate tracts in different counties, the document should be registered in each county where tracts are located.
Personal Guarantees
Commercial landlords frequently require personal guarantees, especially when the tenant is a business entity.
What Is a Personal Guarantee?
Note: A personal guarantee makes an individual (typically the business owner) personally liable for lease obligations if the business fails to pay. This means the guarantor's personal assets are at risk.
Key Elements to Negotiate
Scope: What obligations are covered (rent only, or all costs)?
Cap: Maximum dollar amount of liability
Duration: Time limit on guarantee (initial term only?)
Release triggers: Automatic release conditions
Joint or Several Liability: Individual vs. shared responsibility
Release Considerations
Note: Important: Resigning as a company director or selling shares does NOT automatically release you from a personal guarantee. You must obtain a formal deed of release from the landlord.
Essential Lease Terms
A comprehensive Tennessee commercial lease should address the following:
Basic Terms
Parties: Full legal names of landlord and tenant
Premises: Exact description of leased space
Term: Start date, end date, renewal options
Rent: Amount, due date, payment method, late fees
Security deposit: Amount and conditions
Use and Operations
Permitted use: Specific business activities allowed
Exclusive use: Protection from competing tenants (if applicable)
Operating hours: Required hours of operation
Signage: Rights and restrictions
Expenses and Maintenance
CAM charges: Common area maintenance costs
Utilities: Who pays for which services
Maintenance: Landlord vs. tenant responsibilities
Insurance: Required coverage types and amounts
Alterations and Improvements
Tenant improvements: Who pays for build-out
Approval process: For tenant alterations
Removal: What must be removed at lease end
Exit Provisions
Termination rights: Early termination conditions
Holdover: Terms if tenant stays past expiration
Surrender: Condition requirements at lease end
Court | Filing Fee | Notes |
|---|---|---|
General Sessions Court | $42 | Most common for commercial evictions |
Circuit Court | $225 | Requires bond and security for costs |
Resources and Citations
- TN Code § 66-7-108 - Commercial Lease Disclosure Statement
- TN Code § 66-7-108(b) - Remedies for Misrepresentation
- TN Code § 62-13-405(e) - Commercial Lease Exemption from Agency Disclosure
- U.S. Access Board - ADA Accessibility Standards
- Tennessee Human Rights Commission
- TN Code § 13-7-208 - Zoning Enforcement and Non-Conforming Uses
- Tennessee Register of Deeds Requirements
- TN Code § 29-18-107 - Forcible Entry and Detainer Venue
- Tennessee General Assembly - SB 0292 (2025)
Disclaimer
IMPORTANT LEGAL NOTICE
This document is provided for informational purposes only and does not constitute legal advice. While every effort has been made to ensure accuracy, laws and regulations change frequently, and the information contained herein may not reflect the most current legal developments.
Readers should not rely on this information as a substitute for, nor use it in place of, professional legal advice. Before entering into any commercial lease agreement, you should consult with a qualified Tennessee attorney who can evaluate your specific circumstances and provide tailored legal guidance.
The authors and publishers of this guide expressly disclaim any liability for any loss or damage arising from reliance on the information contained herein.
Document generated: December 2025