Issues for California landlords to consider in their commercial leases
Commercial leases can be long and extensively detailed, requiring legal guidance to protect a landlord’s interests.
Southern California commercial property owners regularly negotiate and enforce leases with tenants in a variety of property types, both single location and multi-tenant: office, retail, industrial, warehouse and more. Commercial leases facilitate business activity in buildings of all sizes and types in downtown locations, suburbs, small towns and rural areas throughout the region.
Commercial landlords vary from those who own one building to those who lease properties on a very large scale like shopping centers or high-rise office towers. No matter the size of the property interest, every property owner seeking to lease space for business purposes needs to be smart about the kinds of leases available and the particular kinds of lease terms that are advantageous and important to include.
A key part of this equation is to engage an attorney with commercial lease experience to educate and advise the landlord about the choices that must be made within a commercial lease in contemplation of property rental to a particular tenant. While many commercial lease forms are available, a boiler plate agreement may not be appropriate in a given rental situation. Legal counsel can draft proposed lease provisions and negotiate with the commercial tenant on behalf of the landlord.
Some of the common lease issues that arise for California commercial landlords include:
- What amount of rent will the property support?
- How will building operating costs like maintenance, utilities, taxes and insurance be divided between the landlord and tenant?
- Will there be a security deposit or letter of credit required?
- What kinds of landlord indemnification or limitation of liability provisions can legally be included under California law?
- Who will be required to guarantee the lease?
- What remedies will the landlord have if the renter fails to pay rent? Will the lease include a rent acceleration clause?
- What will the term of the lease be? Will it include an option to renew or to purchase the property? Under what conditions may either party terminate the agreement?
- Will the landlord agree to make modifications to the premises before the tenant takes possession or even construct an entire structure to meet a tenant’s business needs?
- Will the tenant be responsible for improvements; will the landlord place limits on those improvements; and how will the costs be shared?
- Will the tenant be allowed to sublease the premises and must the landlord approve the subtenant?
- What provisions will govern should the landlord want to sell the property?
- Will the tenant be limited in the kinds of uses allowed on the premises?
- Under what circumstances may the landlord enter the premises?
- What remedies will be included should either party breach the agreement?
- And many more
Should the commercial landlord later face conflict with the renter, have trouble collecting rent or experience outright breach of the agreement, legal counsel will advise the landlord-client of potential legal remedies and lease enforcement, which could include rent acceleration, eviction, renegotiation of the lease terms or other steps.
The attorneys of the Masatani Soroy Law in Los Angeles represent property owners in negotiation and enforcement of commercial leases throughout Southern California.