A commercial landlord is someone who leases or rents commercial property to a tenant through a lease agreement. With this lease agreement, commercial landlord rights are decided upon during commercial lease negotiations. Most states have different laws for residential and commercial rentals, so it is important for landlords to follow the right set of rules. Residential tenants have additional protection built into the statutes, whereas the rights of a commercial tenant are largely dependent on what is in the lease agreement. Therefore, if a commercial tenant agrees to the terms stated in the lease agreement, they will have a difficult time refusing to abide by those terms later on.
General Terms Negotiated for a Lease Agreement
The following are terms that should be negotiated during a commercial lease negotiation.
- Who is responsible for building repairs?
- Amount of rent the tenant will pay and when the payment is due
- How long the tenant will occupy the commercial space
- Is there an option to renew the lease?
- What happens should the tenant make improvements to the building?
- What happens if the lease is terminated before it expires?
- Are subleases and/or assignments acceptable?
Commercial Landlord Rights
Some rights will vary from state to state, but there are some general rights that all commercial landlords have. These rights include:
- The landlord shall receive agreed-upon rent at an agreed-upon time
- The landlord shall be able to enforce the terms of the lease
- The landlord shall require the lessee to maintain the premises in a way where no injury is done to it
- The landlord shall receive possession of the premises after the lease expires
- The landlord shall receive a security deposit from the lessee
- The landlord may sue the lessee for breach of contract
Evicting a Commercial Tenant
The limitations placed on commercial evictions are less demanding than those for residential evictions. However, under Florida law, attorney’s fees for evictions are not provided by law as with residential evictions. A commercial landlord can only collect attorney’s fees if the commercial lease agreement provides for them. This is yet another reason why commercial lease agreements should be very detailed and cover a wide range of possible scenarios, just in case the tenant defaults.
Commercial landlords can take possession and recover damages if they have taken the time to spell out what will happen if the tenant defaults. The commercial landlord will follow the terms of the contract and usually has three options”
1. Take possession of the space and hold the tenant responsible for unpaid rent.
2. Leave the tenant in the property and sue for rent as it comes due or once the contract is up.
3. Evict the tenant and forgo any rent that the contract would have allowed after the eviction occurs.
For more information, please see Evicting a Commercial Tenant.
Landlord/Tenant Relationships During the Pandemic
The COVID-19 pandemic has severely impacted the landscape on a global scale. It has left many small to medium-sized businesses with the inability to pay their rent. While residential renters were afforded protection from being evicted, most commercial tenants have not received the same protection.
The best advice to commercial landlords is to keep the lines of communication open with their tenants. Discuss creative solutions to the issue, such as amortizing missed rent over a number of months after the pandemic has passed or forgiving rent in exchange for immediate payment or increasing the lease term. Perhaps there is business interruption insurance coverage that may be able to be tapped into? Or, perhaps, the tenant may be able to qualify for available governmental assistance programs. Communication is a good way to figure out a win-win solution.
Will Pandemic Changes Be Permanent?
No one knows how long the pandemic will last or how COVID-19 will affect the future of commercial leasing, however, many landlords are beginning to realize the shortcomings of not having a more detailed commercial lease agreement. In the future, many of these leases will need to cover a greater range of possible scenarios.
I’m Rob Robinson. I am a 5th generation Floridian and have been practicing law in Florida for over 30 years. For over two decades, I have assisted commercial landlords with creating lease agreements that protect their rights, as well as their property. If you need legal help with commercial eviction litigation or commercial lease litigation, please don’t hesitate to contact my law office. Oftentimes, having an experienced attorney assist you early on in the process can save you time and unnecessary anxiety, as well as money. I will always work hard to protect your rights as a commercial landlord.