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What is a Bondable Lease? A Comprehensive Legal Overview
Definition & Meaning
A bondable lease is a specific type of lease agreement, often categorized as a triple net lease. In this arrangement, the tenant assumes all potential risks associated with the property. These risks include responsibilities such as rebuilding the property after damage, regardless of whether insurance proceeds are sufficient, and continuing to pay rent if the property is partially or fully condemned. Unlike other lease types, a bondable lease cannot be terminated by the tenant, and rent abatements"temporary reductions or suspensions of rent"are not allowed.
Bondable leases are also referred to as absolute triple net leases, true triple net leases, or hell or high water leases.
Table of content
Legal Use & context
Bondable leases are primarily used in commercial real estate transactions. They are common in situations where landlords seek to minimize their financial risk by transferring all property-related responsibilities to the tenant. This type of lease is often utilized in various sectors, including retail, industrial, and office spaces.
Users can manage bondable lease agreements through legal forms and templates available from services like US Legal Forms. These resources can help individuals and businesses create legally sound documents tailored to their specific needs.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A retail store enters into a bondable lease for a shopping center location. If the building suffers fire damage, the tenant must rebuild the store, even if the insurance payout is insufficient to cover the costs.
Example 2: A company leases an industrial facility under a bondable lease. If the government condemns part of the property for public use, the company is still obligated to pay the full rent for the remaining space. (hypothetical example)
State-by-state differences
Examples of state differences (not exhaustive):
State
Key Differences
California
Requires specific disclosures related to property condition.
Texas
Allows for certain lease termination rights under specific conditions.
New York
Has additional regulations regarding commercial lease agreements.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Key Differences
Triple Net Lease
A lease where the tenant pays property taxes, insurance, and maintenance.
Bondable leases include additional responsibilities like rebuilding after damage.
Absolute Lease
A lease where the tenant has full responsibility for the property.
If you are considering entering into a bondable lease, it is crucial to understand your responsibilities fully. Review the lease terms carefully, and consider consulting with a legal professional to clarify any uncertainties. For those who prefer a DIY approach, US Legal Forms offers templates that can help you create a bondable lease agreement tailored to your needs.
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