As a landlord, it’s not unheard of that you’ll have some disputes with your tenants regarding the terms and conditions of your commercial lease or issues with the property during the lease. Should they demand you take responsibility for a maintenance issue, for example, you might be accused of negligence in a premises liability case.
You need to prepare yourself and your property so that you can readily defend yourself when a tenant brings up an issue.
Below are some of the most commonly contested issues between landlords and commercial real estate tenants.
Use of Premises
In a commercial lease, the use of premises clause identifies and details the property under lease and how it can be used. It’s in the tenants’ best interest not to be in the same building as a competitor or incompatible business as it harms their profit. As such, they may insist that you agree not to rent to these businesses.
Should this come up, you may find it worthwhile to include their request in the clause if you’re able to negotiate for a higher rent in return. Alternatively, you could concede to a lower rent or shorter lease term on the condition that you do happen to lease to a business they specify.
It’s up to you to judge whether either choice is worth it or if you just won’t lease to that tenant. Always consider your long-term prospects before agreeing to anything.
Maintenance & Repair Liability
When it comes to maintenance and repairs, there aren’t many disputes regarding the lease agreement itself. It’s negotiable, but landlords are generally only responsible for structural repairs in many commercial leases. Unless specified, structural portions of the property are required for keeping the property together like the walls, roof, and foundation.
When there is an issue, landlords and tenants usually dispute who caused it. For example, a tenant may claim you are responsible for a leak in the ceiling for neglecting to properly waterproof and seal the roof.
As a landlord, the best way to avoid this problem is to have the property inspected for structural integrity and have it repaired before leasing it. You may also try to reduce your liability by specifying that you are only responsible for certain parts of the property’s structural elements, though the tenant may contest this.
Common Area Maintenance (CAM) charges are the costs associated with maintaining the common areas of the property. These are areas outside the spaces being leased to tenants such as common restrooms, walkways, parking lots, elevators, and electrical rooms, for example. Tenants typically pay a portion of the maintenance for these.
Disputes arise when a landlord decides to get costly repairs done and increases the rent to cover the costs. As a landlord, you can avoid the need for this through regular, preventive maintenance.
But should there be a need for it anyway due to circumstances outside of your control, be sure to properly communicate with your tenants. Negotiate with them and offer ways to pay for the CAM charges while taking their finances into consideration.
Tenants typically withhold rent when they have a dispute with their landlord regarding the lease. And often, the tenants may withhold rent due to a genuine concern.
However, withholding rent is usually not recommended for tenants as the problem would need to be serious enough to impede the agreed upon use of the premises. Also, it is not a common law right and must be expressly allowed by the state. In most cases, you, as a landlord, will be able to evict tenants that withhold rent.
You should ideally settle the dispute with your tenant peacefully. Discuss their concerns with them, explain that withholding rent is not an option, the consequences, and promise to address their concerns should they be legitimate.
Always Choose to Work with Expert Commercial Lease Advisors
Brisky Net Lease’s advisors will act as your bridge between real estate buyers and sellers. We strive to satisfy your needs and give you the knowledge and expertise to prevent lease agreement issues through our real estate investment services.
Fill out our contact form to schedule a consultation or you can call us at 612-413-4200.