FAQ’s For Business Owners

 

richard c wayne

How do I know what the rental amount will be in any extensions or options to renew the lease?  The amount of any future rental increases should be negotiated at the onset.  The parties should decide what, in their opinions, represents a fair increase over the current rate, if any.  If the parties do not intend for the lease amount to increase, the lease should specifically state such.  A well-crafted lease will specifically identify any rental increases and when any such increases take effect. A little extra effort in lease negotiation helps everyone to understand the Landlord’s and Tenant’s financial obligations.

If my landlord evicts my business, can I still be liable for future rent?  Maybe.  The liability for future accruing rent will be governed by the terms of the lease.   If the lease is properly drafted and meets all of the legal requirements to impose liability for future rent, the courts will enforce such a provision.  If the lease does not so provide for continued liability the general rule is that once a landlord evicts a tenant and takes possession of the premises, the lease is terminated and the right to claim rent which accrues after eviction is extinguished.

If I move out of the space and advise the landlord, am I still liable for the rent? Is the landlord under an obligation to attempt to lease my space to someone else?   Unless  a landlord accepts surrender of the lease space or the tenant has otherwise successfully terminated the lease, a landlord is under no duty to attempt to re-lease the space in an effort to mitigate damages.  If the lease specifically provides for the parties’ intention that the tenant will be responsible for future rent, and the lease provision was drafted appropriately, the tenant will continue to be responsible for the rent.

Does my landlord need to obtain a writ of possession before I can be lawfully evicted?  Not necessarily, it would depend upon the lease terms.  In commercial leases, if the landlord has been given the right to reenter and take possession of the leased space without the necessity of legal proceedings, he may do so.  A “self-help” eviction may only be done if it can be accomplished without a breach of the peace.  Although such “self-help” is available, there are risks inherent to any landlord who exercises this remedy.

Do I have the right to sublet the leased premises if my lease does not provide for subletting?  The rights and responsibilities of a tenant, including the right to sublet, are governed by the lease terms.  If the lease says that the tenant has the right to sublet, then the tenant has the right to sublet, under the terms and conditions specified in the lease.  Similarly, if the lease does not provide for the tenant to sublet or otherwise assign the leased premises, or if the lease specifically prohibits subletting, then the tenant has no such right.

If my lease provides for subletting, does the landlord have to accept any prospective sub-tenant I bring them to sublet?  Not necessarily.   Generally, the lease terms will provide for the landlord to approve any prospective sub-tenant.  It would be rare for a lease to provide the tenant with an unequivocal right to sublet.  It is common for the lease to give the landlord the right to approve any prospective sub-tenant.  Likewise, the lease usually states such approval “may not be unreasonably withheld”.    In the absence of clearly defined rights and restrictions, the Landlord or Tenant may find themselves in a situation they did not intend.    For instance, if the original lease provided that the space was to be used for a particular purpose, the landlord could refuse a prospective sub-tenant if their business was not identical to that stated in the original lease.   Even if the original lease was not for a specific purpose, if the prospective sub-tenant intended to use the leased space in a different manner than the original tenant, and such use would have a negative impact on the landlord, the landlord can reject the sub-tenant.  Additionally, if a prospective sub-tenant was not financially stable, a landlord could reject the sub-tenant.  It is imperative that the rights of assignment or subletting be clearly defined in the original lease, and such rights should be clearly understood by the tenant.

As the foregoing discussion demonstrates, it is highly advisable for both Landlords and Tenants to engage the services of an attorney to help negotiate lease terms.  There are so many variables present in each landlord tenant relationship that a form lease rarely works for the best interest of either party.  An attorney can help both parties reach a beneficial result, saving time and money in the long run.