Whether you are the landlord or the tenant in a commercial lease dispute, you know that time is of the essence to ensure your business and personal finances stay protected. The longer disagreements go on, the more you risk financial and legal costs. Plus, due to the pandemic, commercial landlords in Birmingham are looking at an average vacancy rate of 13.85% in 2020, making it essential that their spaces are rented out and stay occupied.
The founder of Clark Law Firm PC, John is an experienced attorney working to solve problems and resolve disputes quickly and efficiently. From his offices in Birmingham, Alabama, he serves both landlords and tenants throughout Alabama and into the Florida Panhandle.
For any commercial lease, there is a lessor (the landlord or the person or company who owns the property) and a lessee (the tenant or the person or business who is renting the property). Often, the lessor/landlord will require a personal guaranty from the owner of a non-natural lessee/tenant (i.e., a corporation or LLC) to ensure payment should the lessee/tenant default on payment or break the terms of the lease.
A basic commercial lease must cover the base rate of rent, the length of term, how the space will be used, options for renewal, and how disputes will be resolved. It should also list the names of the lessor/landlord and lessee/tenant, as well as any agents or property managers responsible for any aspect of the lease. Unless the lease is intended for recording in the real property records, a lease need not be attested by a witness nor notarized. Most leases are not recorded but are private agreements between the lessor/landlord and lessee/tenant.
In general, the tenant has the right to sublease the space unless specifically prohibited in the lease. Most commercial leases forbid subleasing without at least obtaining the consent of the landlord. Typically, the landlord cannot “unreasonably" or "capriciously'' refuse to allow the tenant to sublet the property. Also, the tenant would be permitted to transfer tenant's ownership interests and place a lien on tenant's interest (such as a mortgage) without notifying the landlord; however, most commercial leases specifically forbid both practices. Unless the lease specifically provides for renewal, the landlord is not required to offer renewal of the lease to the tenant.
In general, there are few restrictions on a commercial landlord regarding what must be included in a commercial lease. As long as the terms are clearly spelled out in the lease agreement, the parties are likely bound by their contract. This makes it all the more important to retain an experienced business or commercial attorney to help if you are a landlord or tenant in need of guidance. Landlords may pass any operating expenses onto tenants that are specified in the lease, and there are no restrictions on the amount of rent they can charge as well as no required disclosures due from either party.
Disputes happen for a number of reasons. Lease disputes can easily end up costing both the landlord and tenant if the disputes are not handled efficiently. Common disputes may occur because of unwarranted evictions, failure to uphold maintenance or repair obligations, or failure of either party to properly notify the other of some action or inaction which requires notice under the lease. If you cannot resolve the dispute on your own, the next call should be to an attorney with experience in commercial real estate. Waiting until there are no options is not helpful - as soon as you believe there is a dispute with your landlord or tenant which may not be resolvable, seek assistance. The sooner you engage counsel, the more options may be potentially available.
Once a dispute arises, you need to take care of it quickly. This will not only save you money, but can also ensure your business does not incur any additional or unexpected damages. Perhaps your landlord is threatening an improper eviction or you are trying to evict a tenant properly but who refuses to go. Or perhaps there was a breach of the lease and each side is trying to regain their footing. John can help look at all of your dispute resolution options and formulate a solution specific to your needs.
Those in the Birmingham, Alabama area or throughout Alabama and the Florida Panhandle who are involved in commercial leasing need to have an attorney they can trust when disputes come up—and they will. The best remedy for disputes is to be proactive and only issue clearly-drafted lease agreements, but even the best laid plans go awry. When this happens, call John to make a plan to resolve your dispute so you can get on with your business.