Residential and commercial leases are contracts. This means breaching a term of the lease could result in a contract dispute and hiring a contract lawyer to handle the ensuing real estate litigation. This is particularly true when a commercial tenant wants to prematurely end a lease. Nothing will end a commercial-landlord-tenant relationship faster than a tenant who wants to stop paying rent and move out.
But there are some situations where the commercial tenant will be able to move out and stop paying rent without being in breach of contract. One of the most common scenarios is when there are problems with the building.
Implied Warranty of Habitability
The law has something called the implied warranty of habitability which basically states that real property that is sold or rented must meet minimum standards for use. However, this legal concept usually doesn’t apply to commercial leases. This is because courts are of the belief that commercial tenants are much more sophisticated and have more negotiating power than residential tenants.
Does this mean a landlord can get away with providing a substandard building to a commercial tenant? No, because the commercial lease should have provisions that outline the needs of the tenant that the property must meet as well as what aspects of building maintenance and repair responsibilities the landlord must be responsible for.
Commercial Leases: Buyer Beware
In a commercial lease contract, the lease will spell out the repair and maintenance responsibilities for both the commercial tenant and landlord. Most of the time, the landlord will be responsible for structural items, such as the foundation, walls and roof. As for mechanical items, such as heating and air conditioning, that responsibility could go either way, depending on how the lease is negotiated.
With respect to the maintenance and repair of things in the tenant’s exclusive area (such as carpeting and fixtures), those will generally be the responsibility of the tenant.
Additionally, most deficiencies with the building that arise or are known before signing the lease cannot typically be used as a reason for breaking it later on. A court will likely find that the commercial tenant should have known about the problem, and upon discovery, looked for a different property to rent. Alternatively, the court may conclude that the tenant should have negotiated better terms in the commercial lease to compensate it for the problems with the property.
This is why having a commercial lease attorney to help negotiate and review a commercial lease is so important. The contract attorney can help identify potential problems and develop contingencies that can be inserted into the commercial lease and protect the tenant by giving it a way out of the lease if the situation becomes untenable.
The Bottom Line
A commercial tenant will usually be able to end the lease due to a building issue in two situations. First, the commercial lease contains language that places the responsibility to fix the problem on the landlord and the landlord is unable or unwilling to do so. Second, the commercial lease explains certain requirements for the property and allows the commercial tenant to back out of the lease if the property fails to meet these requirements.
For More Information
If you believe your commercial property has problems which are the result of your landlord not complying with his or her duties under your commercial lease, contact the Thomas Law office to speak with a lawyer to who can explain your legal options and next course of action.