Landlord Considerations in Leasing Commercial Property
By: Kyle Jensen, Esq.
Clark, Campbell, Lancaster & Munson, P.A
A commercial lease agreement is an agreement between an owner of commercial real property, known as the landlord, and a third-party desiring to rent such commercial property, known as the tenant. The lease agreement provides the tenant with the right to use the property, sets forth the terms and conditions of such use, and imposes certain rights and obligations on both the landlord and the tenant. Accordingly, it is in the best interest of the landlord to ensure the lease agreement accurately and unambiguously sets forth the terms, conditions, rights and obligations the landlord desires to impose and properly protects the rights and interests of the landlord.
When preparing a lease agreement, a landlord should confirm its lease agreement complies with all legal requirements established by Florida law to ensure the lease agreement is enforceable. For example, any lease agreement in excess of one year must be in writing and must be signed before 2 subscribing witnesses.
A lease agreement should clearly define the beginning and end of the lease term and provide the landlord with sufficient remedies if the tenant refuses to vacate the leased premises once the lease term is over. The lease agreement should also set forth the base rent obligations a tenant must pay to occupy the premises and include any additional rent obligations the landlord desires to impose upon the tenant, such as payment for (i) the utilities the tenant consumes, (ii) a portion or all of the property taxes assessed against the landlord’s property, (iii) a portion of the costs to maintain the common areas (areas used by all tenants) of the landlord’s property, and (iv) janitorial and waste collection services for the premises. It is also important that the rent provisions of the lease agreement impose upon the Tenant the obligation to pay all sales tax that may be due on the rent paid under the lease agreement.
Maintenance obligations are another important item a landlord must consider. Generally, but not always, a landlord will maintain the exterior, foundation, and roof of the building the tenant is occupying. The landlord will want to impose most, if not all, other maintenance obligations on the tenant. A landlord may also want to require the tenant enter into a maintenance agreement for maintenance of certain items in the premises, such as the HVAC unit, to ensure the tenant is properly fulfilling its maintenance obligations.
Lastly, a landlord should ensure the lease agreement clearly and broadly defines what actions, or failure to act, will cause a breach of the lease agreement, such as failure to pay rent, and provides the landlord with sufficient remedies upon such breach. For example, unless otherwise provided in the lease agreement, a landlord is only entitled to collect rent as such rent becomes due. Accordingly, a landlord will want the lease agreement to provide that if the tenant breaches the lease agreement, then the landlord can accelerate and collect all future rent due under the lease agreement. Such a provision allows the landlord to, upon the tenant’s breach, immediately collect all future rent due under the lease agreement, subject to present value calculations and reimbursement obligations if the premises is re-let, without waiting each month for such rent to become due.
The above items are only a few of the numerous matters a landlord should consider when preparing a lease agreement. Furthermore, the content of the lease agreement will depend on, among other things, the use, condition, and location of the commercial property and the long-term goals of the landlord. Therefore, a landlord should seek the services of an experienced commercial real estate attorney to assist with the preparation of the lease agreement.
Kyle Jensen is an attorney with the law firm Clark, Campbell, Lancaster & Munson, P.A. in Lakeland. Questions can be submitted to firstname.lastname@example.org.
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