Many businesses need to lease commercial space in order to operate effectively, and this typically involves entering into a written agreement with the owner or lessor of the property. Commercial lease agreements are considerably more complicated than residential leases, and there are a number of different terms and conditions that the landlord and tenant agree to abide by. Because of the complex nature of commercial leases, it is not uncommon for landlord-tenant disputes to arise.
Some common disputes that result from commercial leases include:
Failure to Pay Rent
One of the most common contested issues in a commercial lease is when a landlord claims that a tenant has failed to pay the rent as required by the lease agreement. Alabama law allows a landlord to commence eviction proceedings against a tenant that is in default after giving a 7-day to pay notice.
When something goes wrong in the building and a repair is needed, the question of who is responsible for the repair can be a point of contention. In general, landlords are responsible for the exterior and structural portions of the premises, while tenants are obligated to make necessary repairs inside the unit. This, however, is something that can be negotiated in the initial lease agreement.
Disputes sometimes arise in this area because of a question over who caused the problem in the first place. For example, if the ceiling is leaking inside the unit but it was caused by a pipe that burst in another part of the building, the tenant might believe that this is the landlord’s responsibility.
Common Area Maintenance (CAM) Fees
Commercial leases typically require the tenant to pay a portion of the common area maintenance (CAM) charges along with the agreed-upon rent. CAM fees usually cover the cost to maintain common areas of the property and in some cases, other operating expenses that the landlord incurs, and they are often billed at the end of the year. Disputes tend to happen when the CAM fees rise drastically from one year to another, which can happen when there was a major repair done, such as re-roofing the building.
Alterations/Improvements to the Premises
Many commercial tenants need to make structural changes to the unit they are renting in order to fit the needs of their business. For example, a restaurant takes over a space that was previously used as a dental office. The landlord understands that the unit will require some significant alterations, but how far is the tenant allowed to go? If their renovation plan is not clearly spelled out and approved ahead of time, this could give rise to a landlord-tenant dispute.
Assignment and Subletting Restrictions
Oftentimes, tenants sign a longer-term lease in exchange for lower rent and other more favorable terms. But over time, the needs of the business might change. For example, the tenant might find out that they only needed about half the amount of space that they rented, and they would like to sublet the other half to another party. Or maybe they found a better location and they want to move and assign the remainder of their lease to a new tenant. In these situations, the landlord usually has to give approval for any assignments or subletting, and if they do not approve, this could be a major problem for the tenant.
Closely related to the last point, there are times when a tenant goes out of business before their lease is up and they want to get out of it early. Early termination of commercial leases is a common occurrence, and the way this is handled is subject to the terms and conditions of the lease agreement. Sometimes, this means that the tenant owes a large sum of money which they may not be able to pay.
Security Deposit Disputes
When the tenant leaves, there might be a dispute over how much of the security deposit the landlord is obligated to return to them. In general, landlords are allowed to deduct missed rent and damage caused by negligence, abuse, or carelessness. However, they are not allowed to deduct for ordinary “wear and tear”. Disputes often arise over what damage is the tenant’s fault and what should be considered “wear and tear”.
Resolving Disputes with Commercial Leases
When landlords and tenants are involved in commercial lease disputes, it is rarely in anyone’s interests to go straight to litigation. Most often, the best approach is to try to resolve these disputes between the parties. This is often done through negotiation between the parties’ legal counsels, or another form of alternative dispute resolution such as mediation. If all other efforts fail, it may be necessary to file a lawsuit. Just the act of filing can sometimes be enough to bring the other side to the table, but if not, the parties can present their cases to a court.
Contact Our Reputable Alabama Commercial Real Estate Attorneys
If you are involved in a dispute over a commercial lease, it is best to retain an experienced attorney to help ensure that your best interests are protected as you seek to resolve the underlying issues. If you are in Alabama, contact Stone Crosby, P.C. for assistance. For a personalized consultation with one of our attorneys, call our Daphne, AL office today at (251) 626-6696 or send us an online message. We look forward to serving you!