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3 common ways commercial tenants violate their leases

On Behalf of | Apr 29, 2024 | Real Estate |

Landlords who own commercial properties often have less marketing to do than landlords who rent out residential homes. Their leases last for longer, and businesses are often eager to secure properties in certain areas with high traffic levels or appropriate zoning.

There’s also a reasonable expectation that commercial tenants are less likely than residential tenants to violate the terms of a lease. A business isn’t going to try to sneak in pets that violate the terms of a lease or allow overnight guests to become roommates who aren’t actually on the lease.

However, there are still plenty of ways for commercial tenants to violate the terms of a lease agreement. Commercial landlords therefore need to be on the lookout for warning signs of lease violations that may require prompt action to protect the property and the income of the landlord. The following are some of the more common commercial lease violations that occur.

Changing business functions

Commercial leases often include specific terms outlining exactly how a business tenant can use the commercial space. For example, a landlord may allow a tenant to occupy the space and use it for production but may include terms that prevent customers or clients from coming to the space due to premises liability concerns. If a business pivots to a different model or changes what services it offers, leadership at the organization may need to verify that those changes are acceptable to the landlord. A major change in the utilization of the space could potentially constitute a lease violation.

Attempting to assign the lease without permission

Commercial leases often include clear provisions outlining whether or not a tenant can arrange for another party to take over their lease. Lease assignment can help struggling businesses terminate a lease that may otherwise last for years. Particularly when the agreement with the landlord explicitly prohibits lease assignment, the attempt to arrange for another business to take over the lease could constitute a violation of the lease and may not necessarily protect the business tenant from liability for future rent payments.

Failing to maintain the facilities

It is common for commercial leases to split maintenance and repair responsibilities between the tenant and the landlord. Landlords who assign maintenance responsibilities to tenants may need to make arrangements for regular inspection. That way, they can act promptly if a tenant’s failure to maintain the space could diminish the overall value of the facilities.

Commercial landlords often benefit from carefully customizing each lease agreement to reflect the needs that they bring to the table and the requirements of their tenants. Taking appropriate steps to enforce a lease can be as important as adding the right terms initially for the protection of a landlord’s financial interest in a property.