Leasing out commercial property can be lucrative. With that said, there are often challenges that landlords face when dealing with commercial tenants. Although many of these disputes can be sorted out informally, sometimes the issue is so severe that it leads to litigation. If you don’t know how to get a handle on these matters, you could end up on the losing end of your case, which could cost you a lot of time, money, stress, and goodwill.
But if you’re new to commercial leasing, you might not even know what to look out for. That’s why we wanted to write this post. After reading it, we hope that you’re better equipped to identify some key commercial landlord-tenant issue that you can proactively try to avoid.
Common commercial landlord-tenant issues
There are a lot of issues that you might see with your tenants. Some, though, are more severe than others. Here are some key disputes that you’ll want to try to avoid. If you can’t avoid them, you need to know how to deal with them appropriately.
- Issues pertaining to maintenance and repairs: Commercial properties have issues over time. A leaky roof can lead to water damage, and electrical issues can disrupt business operations. There’s a whole host of repair and maintenance that will be needed, including fixing light fixtures, plumbing, and even things as seemingly minor as carpeting.
To prevent these issues from coming up, you’ll want to make sure that you negotiate clear understandings in your lease agreement. If you end up facing a dispute, you’ll want to analyze the terms of your lease to see how you can argue that you’re not responsible for the maintenance and repairs in question.
- Unauthorized lease assignments: It’s inevitable that you’ll have tenants who go out of business or sell their business in the middle of their lease term. When this happens, the business might try to reassign the lease so that they can avoid their remaining obligations under the lease. But if you haven’t approved of that reassignment, you might run into issues. Confusion of lease obligations may lead to non-payment and other non-compliance with the lease terms.
Make sure that your lease agreement specifies how lease reassignments are to be handled. If you suspect that a lease assignment is contrary to the terms of the lease, you’ll want to talk to the original tenant and the party to whom the lease was reassigned so that you can gather evidence to support your position should the need for litigation arise.
- Lease renewal problems: At the end of a lease term, a business might expect to renew it based on the same terms of the original lease. This can leave you happy and excited to continue to conduct its business there, especially if it’s been successful in that location.
However, you’re not required to offer the same terms in a subsequent lease agreement. You can negotiate the terms as you see fit. Thus, you’ll want to make the renewal process clear to your tenant and not give in to dashed expectations that aren’t in your best interests.
Be prepared to handle your commercial real estate issues
As a commercial real estate owner, you’re bound to face a number of issues over time. But you don’t have to let them derail your business. Instead, you can educate yourself about the law and what you can do to protect your interests when these issues arise. That way, you can confidently move forward with your business with a firm understanding of what’s to come.