What Items Should Be Included In Your CA Commercial Lease Agreement?

Lease agreement document with money on a wood background

Whether you are the tenant or the landlord entering in a commercial lease agreement, you obviously want to take steps to ensure that your interests are adequately addressed and protected by the lease agreement. Your main focus in entering into the lease agreement will probably be the amount of rent paid and the duration of the lease, but here are several other items that should be included in your California commercial lease agreement, and which should be drafted and/or negotiated in concert with your attorney to make sure rights are protected.

Does the Tenant Have Rights to Common Services?

A commercial landlord may provide for a number of common services to commercial tenants throughout a building or other common area, such as security services, gardening, cleaning, trash removal, fire safety, and so on. The lease agreement should state what services are included, and whether the charges are to be passed on to the tenant or paid by the landlord.

Who Is Responsible for Maintenance and Repairs?

Similarly, a common issue that can arise in disputes between a commercial landlord and tenant is with regard to which party is responsible for paying for ongoing maintenance and repairs on the property. This provision may be tailored specifically to the types of activities that the tenant will be performing on the property, such as provisions specific to running a restaurant or foodservice business.

What Rights to the Parties Have to Terminate the Lease?

It is of course the case that a business’ ongoing property needs are often determined by the unknowable question of whether the business will succeed or struggle. A tenant may go out of business in six months, or it may need to triple its size to handle demand. The lease agreement should contain provisions addressing what each party’s rights are should either party want to terminate the lease.

Does the Tenant Have a Right to Constructive Eviction?

Constructive eviction can occur when a tenant argues that a landlord has not provided a property that meets a baseline suitability for the tenant’s purposes, e.g. infestation, noxious fumes, or disrepair not caused by the tenant. In such a case, a tenant sometimes has a right to vacate the property (after notice is provided) and stop paying rent via the act of constructive eviction. California allows landlords and tenants to opt out of this option via the lease agreement, however, and thus this should be considered when drafting the lease.

What Happens if the Rent is Delinquent?

As with residential lease agreements, it is common for commercial lease agreements to contain a provision regarding what should occur when the rent payment is delinquent. This should include grace periods for paying rent, any applicable fines for paying late, and procedures that might be taken if rent is still not paid, such as eviction procedures.

How Will Disputes Be Resolved?

Commercial lease agreements will also often contain provisions regarding how disputes between the landlord and tenant should be resolved, such as through going to an arbitrator.

Work With an Experienced Los Angeles Real Estate Litigation Attorney

The above are just a few of the provisions for tenants and landlords to keep in mind when drafting and negotiating a lease agreement that meets their needs, and both parties are highly encouraged to work with a real estate attorney who can assess the particular issues that need to be addressed, as well as the relevant state and local law that will affect the interpretation of a commercial lease agreement in their particular jurisdiction.
Attorney Laine T. Wagenseller of Wagenseller Law Firm has published numerous articles on real estate law and works with individuals and businesses across Southern California in resolving real estate matters, including disputes arising from commercial leases. Contact Wagenseller Law Firm today to schedule a consultation in order to evaluate your situation and begin working towards a positive resolution.