Kentucky Commercial Lease Agreement

Implied Covenant of Good Faith and Fair Dealing

• All related parties will act honestly and cooperate with fair dealings during the agreement. 
• If one party doesn’t carry out the covenant, it can even be grounds for a court case to deem the contract invalid.

Statutory Notice Periods

• There are no specific statutory notice periods for commercial leases. However, many landlords follow the notice periods that apply to residential leases, which are 30 days. 
• If the lease ends, then the tenant must receive seven (7) days to vacate the property.

Security Deposits

• Kentucky doesn’t limit the amount a landlord can ask for a commercial lease security deposit. As such, the lessors can ask for any amount they believe is reasonable for the security deposit. 
• The landlord doesn’t need to hold the deposit in an interest-bearing account, but the account must be for the exclusive purpose of keeping the deposit. 
• They must disclose to the tenant where they hold the monies, but there are no statutes regarding when they must return the security deposit.

Disclosures

Kentucky has three legal disclosures you must add to the lease. If you don’t add it, then a court of law can deem the agreement invalid.

• Lead-Based Paint Disclosure: Landlords must inform commercial tenants if the building is older than 1978. That’s because it might contain lead-based paint, and the lessor must also provide information on the hazards of this paint.
• Move-in Inspection: The lessor must allow the tenant to inspect the property before moving in. Should the lessee decide they don’t want to proceed with the agreement after the inspection, then with reasonable cause, they can sign a waiver and terminate the deal.
• Security Deposit Account: As mentioned above, the lessor must hold any security deposit in an account specifically for it. Landlords must give the tenant details on where this account is.

Termination and Renewal

• Commercial leases are generally valid for much longer terms than residential contracts. It can range from one to 10-year fixed terms. 
• If the tenant wants to break the lease before the fixed term is up, then they or the landlord must find someone to take over the lease. 
• If they find a new tenant, the original tenant only needs to cover the rent the landlord loses until the new one moves in. 
• If they can’t find a new tenant, then the original lessee remains responsible for the rest of the lease term. 
• The lessee must let the lessor know 60 days before the lease’s expiration whether they want to renew it.