Indiana Commercial Lease Agreement

Implied Covenant of Good Faith and Fair Dealing

In Indiana, there’s an implied covenant of good faith and fair dealing in every commercial lease agreement. This covenant requires both parties to act honestly and fairly, avoiding any actions that might disadvantage or harm the other party. Violations of this covenant may lead to legal repercussions.

Statutory Notice Periods

Fixed-Term

The Indiana Commercial Lease Agreement generally binds the Lessee for the agreed period unless there’s a provision for early termination, which may include specific conditions or penalties. However, Lessors must give three months’ notice for year-to-year fixed contracts (Indiana Code [IC] 32-31-1-3).

Rent Increase

Indiana law allows landlords to increase the rent at the end of a lease term. A 30-day notice is required for this increase in compliance with IC 32-31-5-4.

Lease Renewal

The lease agreement typically mandates a specific period, generally 30 to 90 days before lease expiration, within which the Lessee must notify the Lessor of their intent to renew. Not observing this specified period may lead to the loss of the option to renew.

Security Deposits

Additional Move-in Fees

Indiana doesn’t have specific state laws regulating additional move-in fees. Therefore, lessors have the discretion to charge fees they deem appropriate.

Security Deposit Limit

There’s no state-imposed limit on security deposits in Indiana. Lessors typically charge an equivalent of one to two months’ rent, though they can set any amount. Security deposits must be refundable, barring justified retention for damages or other permitted reasons, as outlined in IC 32-31-3.

Handling of Security Deposits During Tenancy

Indiana law doesn’t mandate a specific method for holding security deposits during the Lessee’s occupancy. Local laws may stipulate further obligations, including the necessity for escrow account usage.

Return of Security Deposit

Lessors in Indiana are required to return security deposits within 45 days after the termination of the lease. If withholding a portion for damages, lessors must provide written notice detailing the damages, repair costs, and the deducted amount. Failure to provide this notice prohibits withholding any part of the deposit (IC 32-31-3).

Modes of Security Deposit Payment

Unlike many states, Indiana doesn’t restrict the form of security deposit payments. The Lessee can make a deposit payment with cash, check, money order, or even by placing a lien on a vehicle (IC 32-31-3).

Disclosures

In Indiana, lessors are obligated to make several mandatory disclosures under state and federal law, including:

1. Smoke Detectors

The presence and functionality of smoke detectors, as mandated by IC 32-31-5-7.

2. Flood Plain Location

Disclosure of property location within a flood plain, if applicable (IC 32-31-1-21).

3. Lead-Based Paint

In accordance with federal law, the Lessor must disclose the presence of lead-based paint in properties built before 1978. The lessor should provide the Lessee with a federal pamphlet on lead paint hazards.

4. Hazardous Materials

Any known hazardous materials on the property, as required by IC 32-31-5-7.

5. Designation of an Agent

Indiana property Lessors can appoint an agent to handle and receive disclosures. The lease agreement must explicitly state this agent’s identity and contact information as per IC 32-31-3-18. The designated agent can include a property manager or any authorized representative.

Termination and Renewal

Renewal Clause

The Indiana Commercial Lease Agreement often incorporates a renewal clause. This provision delineates the conditions under which the Lessee may extend the lease beyond the initial term. This clause’s key elements usually include the duration of the renewal period, rent adjustments, and other essential terms.

Lease Termination for Violation

In cases where the Lessee violates the lease terms, the lessor, under IC 32-31-1-6, may issue a 10-day notice. This notice requires rectification of the violation or property vacation within 10 days. Non-compliance permits the lessor to initiate termination proceedings.