Landlords and Leases
October 18, 2006

Q:  Is there a "typical" lease? I am moving from a month-to-month situation into a place where I will be signing a multi-year lease and I don't know what I should be asking of the new landlord in the lease or what to expect him to do. -- Alana

A:  The first thing to understand about landlord-tenant laws is that they vary state to state. That said, while individual states may have specific laws covering certain situations, by and large, general rules and principles apply.

Your question reminds me of just how important it is to know what the really lease says before you sign it. Longtime readers know that I like you to avoid lawyers and lawsuits where possible, but this is a situation where hiring competent counsel is worth every penny.

I am reminded of my old client who owned a burger joint and got stuck with a long-term lease he could not get out of. Why? It had a "no assignment" clause, yet even though he didn't know what an assignment was, he also did not want to pay for a lawyer, and so he signed the lease anyway and lived to regret it.

Typically, a landlord in a commercial lease is responsible for the following:

• Structural components like roofs and floors

• Security

• Keeping the building up to code

• Providing utilities to the building

• Garbage removal

• Repairs

• Upkeep of the common areas like lobbies and halls

Many parts of a lease are negotiable, especially if the space has been vacant for some time. Indeed, even though the lease is on a pre-printed form, it was drawn up in favor of the landlord, so be sure you negotiate key parts where appropriate. For instance, your landlord may want you to help pay for the common area upkeep. That is not unusual, but be sure to limit the amount and type of upkeep you will be responsible for.

Other issues to be concerned about:

• Assignment and subleases: An assignment is when you can transfer all of your rights and responsibilities to another party. A sublet is when you remain liable for the contract, even if you get someone else to pay the rent in your stead. The landlord should not unreasonably withhold your right to assign or sublet your space.

• Repairs and maintenance: Be sure that the lease does not require you to fix items that should not be your responsibility, such as the HVAC, plumbing, or building structure. Under a "gross lease" the landlord handles all such repairs, as opposed to a

• Triple net lease: With a triple net lease, the tenant is responsible for a proportional share of the taxes, insurance, and maintenance expenses.

• Tenant remedies: Some commercial leases want you to waive your rights, such as the right to "repair and deduct" (in which you fix a problem the landlord has refused to fix and deduct the cost from the next month's rent.) If forced to abandon this right, be sure you do have the right to terminate the lease early upon landlord default.

• Improvements: Get all promises for improvements in writing.

Finally, aside from lease provisions, you should also know what landlord actions are illegal:

• Even though you may fall behind in rent, the landlord cannot legally shut off your utilities.

• Similarly, the landlord cannot change the locks or otherwise lock you out of the leased premises.

• The landlord cannot seize your personal property from the space, unless you abandon it.

• Retaliatory evictions are likewise illegal. If, for instance, you complain to the city about a building code violation, your landlord cannot legally take any retaliatory measures against you, such as evicting you.

While it is good to know these rules, the best thing you can do is have a good working relationship with your landlord so that minor problems don't become major ordeals.

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Today's tip: Much of the above comes from my own background as a business lawyer, but I did add some valuable tips and insight from a new book called The Streetwise Small Business Book of Lists, edited by Gene Marks. I contributed one list to this great book, but there are hundreds more, covering all sorts of topics. Steve says check it out.
 

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