Disputes over a commercial lease arise when the landlord or the tenant believes there has been a violation of the commercial lease agreement. Common claims of violating a commercial lease agreement include disagreements about property maintenance, damage to the property, early termination, unpaid rent, disputes over shared spaces, utility costs, maintenance and repair issues, rent withholding, and subleasing. Regardless of the specific issues that give rise to the dispute, the experienced real estate lawyers at RKPT can help.
Avoiding Commercial Lease Disputes
Many business owners need to lease commercial space. Before signing a commercial lease agreement, be sure you understand the lease terms. Perhaps most critically, know that a commercial lease agreement does not offer you the same protections you would have in a residential lease.
Rent will likely be one of your most significant fixed expenses. You need a lease agreement that will protect you from unreasonable rent increases during the lease term and provide stability for years to come.
Before signing the lease agreement, you should consult an experienced commercial real estate attorney. The real estate attorneys at RKPT will review the commercial lease agreement and explain its terms so you can avoid many of the pitfalls that a commercial lease agreement can present. We are also available to assist with negotiating a commercial lease agreement.
Perhaps the most critical piece of advice regarding commercial leasing is this: if you are presented with a commercial lease agreement and there are terms you do not understand or do not agree to, do not sign the contract! If you sign a lease agreement you do not agree with or do not understand, you increase the likelihood of violating a commercial lease agreement violation in the future.
Commercial Lease Agreements Are Different than a Residential Lease
Commercial tenants do not have the same rights as residential tenants. In a residential lease, the parties have any additional legal protections beyond what is specified in the contract. This is not the case in a commercial lease.
In addition, the term of a commercial lease is typically much longer than in a residential lease. A commercial lease will also include unique items, and the contract will be strictly enforced, even if the result may seem unfair or unreasonable.
A commercial lease agreement should be prepared specifically for the property being leased and should address the landlord and tenant's unique needs and concerns.
Cancellation of a Commercial Lease Agreement
If a business is failing, the tenant might be interested in seeking cancellation of a commercial lease agreement.
Some commercial lease agreements include conditions under which the commercial lease agreement can be canceled. Early cancellation of a commercial lease agreement may involve penalties, but those penalties are often a better financial alternative than paying rent for the duration of the lease.
Some commercial lease agreements allow for cancellation of the commercial lease by providing advance notice, such as 30 days or 60 days.
In other cases, especially where the landlord and the tenant have a good working relationship, the landlord might let the tenant out of the lease early without a penalty. Early cancellation might benefit the landlord as it is better to arrive at a mutually agreeable solution rather than paying legal fees to obtain and collect on a judgment.
Resolving Alleged Violations of a Commercial Lease Agreement
When there is a dispute about a violation of a commercial lease agreement, the landlord and the tenant should try to work the matter out amicably. When alleged violations of a commercial lease agreement cannot be resolved amicably, the parties may engage the services of a commercial real estate lawyer.
There are different ways to resolve a dispute over a commercial lease agreement violation.
Negotiation. The landlord and the tenant, with or without assistance from counsel, work together to resolve the dispute.
Mediation. After a lawsuit has been filed, the parties might agree to mediate their dispute. A third party, often an attorney, can serve as a mediator to facilitate a compromise.
Arbitration. The parties to the lawsuit submit testimony and evidence to one or more arbitrators. The arbitration panel will decide whether there was a violation and, if so, what the remedy should be. Arbitration can be binding or non-binding.
Litigation. If the above methods are unsuccessful, it might be necessary to take the case to trial.
Resolving a commercial lease dispute can be complicated, and assistance from an experienced commercial real estate attorney is vital.