Top Nine Commercial Leasing Mistakes for a Landlord to Avoid
A commercial lease is a legal agreement between a landlord and tenant, and like any legal agreement, there are many potential pitfalls. Because of both the increased complexity of commercial leases and the high dollar amounts typically involved, it is critical in most cases that you consult a real estate attorney before signing such a document, whether you are the property owner, the owner’s representative, or the tenant.
It would not be possible to outline, in a single blog, all of the possible mistakes that a commercial landlord could make in a lease. We all know how complicated the law can be at times. However, we have found that many legal mishaps arise from the following situations, so getting familiar with them is a good way for commercial property owners to avoid problems.
Asking the wrong questions. Even if you don’t intend to do so, asking certain questions of your prospective tenant could give the impression that you intend to discriminate based on race, religion, gender, disability, and so on. These types of discrimination are strictly prohibited by the Fair Housing Act.
Illegal provisions. Be careful about provisions that you include in the lease; legality can vary from state to state, and even city to city.
Failure to make disclosures. Even though commercial leases do not carry the same disclosure burdens as residential leases, there are many laws on the books regarding which facts you must disclose to tenants (such as the presence of mold, or lead paint, for example).
Repair problems. A commercial lease should clearly state who is responsible for what types of repairs. Failure to follow up on your end of the deal can result in loss of rent, a severed lease, and monetary damages.
Safety. In some cases, tenants have won lawsuits against landlords who knowingly allowed unsafe conditions or activities to persist. Laws regarding safety can vary according to location.
Privacy. In most cases, strict regulations exist regarding when and under what circumstances the landlord can enter the property.
Security deposits. Many a former tenant has successfully sued for the recovery of the security deposit after moving out of a unit.
Inappropriate disposal of abandoned property. Believe it or not, there are actually rules governing how landlords may proceed with disposing of property left behind by former tenants.
Improper eviction process. Your lease should clearly outline the situations under which the lease can be prematurely terminated by you, the landlord, and you must follow the law to the letter.
These are just nine of the most common commercial leasing problems experienced by landlords. When you consider that there are several, if not dozens of ways that each of these problems can manifest, it’s easy to see how unfortunate situations can multiply quickly. Consult with our real estate attorneys before devising or signing a commercial lease, and we can help you avoid many legal complications of property ownership and management.