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Commercial lease agreements often bring numerous benefits to all parties. The operator of a business has a desirable space to carry out their commercial activities, and the owner of the property receives a steady income. Unfortunately, commercial lease agreements do not always work out, and disputes may arise. So, how does this happen? And how might such disputes be resolved? Unambiguous terms in the lease More often than not, disputes regarding commercial leases relate to the terms of the contract. It is vital that contractual terms are clearly expressed so that all parties know exactly where they stand. Frequently, tenants assume that they have access to certain utilities, which the owner had no intention of including in the deal. Confusion over contractual provisions is a sure way for conflict to occur, so it is vital that all parties have a frank discussion about their expectations before committing to a deal. The outcome of these conversations should be incorporated within a watertight contract. When a landlord oversteps the mark A landlord may rely upon the profitability of a business to ensure that they obtain regular payments. This means that they have an active interest in how business operations run day-to-day. Their motivations may stem from securing short-term payments, rather than ensuring that the business remains profitable for the duration. Tenants may be at odds with these values, making the possibility of a dispute much more likely. When a tenant oversteps the mark It is possible that tenants overstep the mark and wrongly assume the position of the property owner. For instance, they might opt to make significant renovations to the property without any permission. For this reason, it is vital that a lease agreement clearly sets out who is responsible for building repairs and renovations. Commercial leases can be beneficial for all parties, but only if they are well-drafted. If you are facing a dispute over commercial real estate, be sure to gain a firm understanding of your legal rights in California.

Commercial lease agreements often bring numerous benefits to all parties. The operator of a business has a desirable space to carry out their commercial activities, and the owner of the property receives a steady income. Unfortunately, commercial lease agreements do not always work out, and disputes may arise. So, how does this happen? And how might such disputes be resolved? Unambiguous terms in the lease More often than not, disputes regarding commercial leases relate to the terms of the contract. It is vital that contractual terms are clearly expressed so that all parties know exactly where they stand. Frequently, tenants assume that they have access to certain utilities, which the owner had no intention of including in the deal. Confusion over contractual provisions is a sure way for conflict to occur, so it is vital that all parties have a frank discussion about their expectations before committing to a deal. The outcome of these conversations should be incorporated within a watertight contract. When a landlord oversteps the mark A landlord may rely upon the profitability of a business to ensure that they obtain regular payments. This means that they have an active interest in how business operations run day-to-day. Their motivations may stem from securing short-term payments, rather than ensuring that the business remains profitable for the duration. Tenants may be at odds with these values, making the possibility of a dispute much more likely. When a tenant oversteps the mark It is possible that tenants overstep the mark and wrongly assume the position of the property owner. For instance, they might opt to make significant renovations to the property without any permission. For this reason, it is vital that a lease agreement clearly sets out who is responsible for building repairs and renovations. Commercial leases can be beneficial for all parties, but only if they are well-drafted. If you are facing a dispute over commercial real estate, be sure to gain a firm understanding of your legal rights in California.

As a commercial landlord here in Los Angeles, you will likely have to deal with the issue of subleasing at some point. Unless you unilaterally forbid subleasing specifically in your leasing contract for your commercial tenants, it’s quite possible that the current economic instability could give rise to requests for subleasing. How you respond to such requests matters a great deal. Since you don’t want to wind up as a defendant in a civil lawsuit, the following guidelines can be helpful in those circumstances. What are the tenant’s rights in the matter? As stated, unless specifically prohibited by the leasing contract, your tenant does have a right to sublease the property. As the property owner, you retain the right to restrict the type of business that the potential subtenant proposes to open. However, there is a caveat. A landlord’s consent may not be “unreasonably withheld.” While that clause is open to liberal interpretation, it is always best to err on the side of caution and seek a legal opinion whenever you are in doubt about your position. The tenant remains liable When a tenant takes on a subtenant, the original tenant remains liable for all of the financial burden to the property owner. They remain responsible for collecting the subtenant’s share of the rent because they have the role of surety for the original financial obligations. If the subtenant moves out in the middle of the night and skips out on their portion of the rent, that is not the property owner’s responsibility to pursue payment. The tenant absorbs the entire responsibility for paying the full rent according to the terms of their lease. Is it advantageous to allow subleasing? While circumstances do indeed matter, e.g., the type of business the sublessee plans to operate, from an owner’s perspective, a sublease tenant can indeed be a positive thing. In an uncertain economy where your original tenant may be struggling to make rent each month, a subtenant’s contributions can make the difference between shutting down and abdicating the tenant’s responsibility to pay rent and continuing to operate their business.

As a commercial landlord here in Los Angeles, you will likely have to deal with the issue of subleasing at some point. Unless you unilaterally forbid subleasing specifically in your leasing contract for your commercial tenants, it’s quite possible that the current economic instability could give rise to requests for subleasing. How you respond to such requests matters a great deal. Since you don’t want to wind up as a defendant in a civil lawsuit, the following guidelines can be helpful in those circumstances. What are the tenant’s rights in the matter? As stated, unless specifically prohibited by the leasing contract, your tenant does have a right to sublease the property. As the property owner, you retain the right to restrict the type of business that the potential subtenant proposes to open. However, there is a caveat. A landlord’s consent may not be “unreasonably withheld.” While that clause is open to liberal interpretation, it is always best to err on the side of caution and seek a legal opinion whenever you are in doubt about your position. The tenant remains liable When a tenant takes on a subtenant, the original tenant remains liable for all of the financial burden to the property owner. They remain responsible for collecting the subtenant’s share of the rent because they have the role of surety for the original financial obligations. If the subtenant moves out in the middle of the night and skips out on their portion of the rent, that is not the property owner’s responsibility to pursue payment. The tenant absorbs the entire responsibility for paying the full rent according to the terms of their lease. Is it advantageous to allow subleasing? While circumstances do indeed matter, e.g., the type of business the sublessee plans to operate, from an owner’s perspective, a sublease tenant can indeed be a positive thing. In an uncertain economy where your original tenant may be struggling to make rent each month, a subtenant’s contributions can make the difference between shutting down and abdicating the tenant’s responsibility to pay rent and continuing to operate their business.

There are a number of types of commercial leases, as our readers likely know. One that isn’t talked about a lot is a full-service lease. These are most often used when leasing space in large office buildings. Basically, a full-service lease is similar to a gross lease. The costs of just about everything involved in maintaining the building are factored into each tenant’s monthly rent. This includes property taxes, insurance, utilities and common area maintenance (CAM). Advantages and disadvantages for tenants Many tenants prefer this kind of lease because it’s simpler. They have a rent payment every month that covers just about all of the expenses associated with the property they’re using. This can be a big advantage when budgeting. They can also avoid some monthly rate fluctuations – particularly if gas and electric costs are included. However, if you’re considering a commercial space with a full-service lease, be prepared to pay more than you would for other types of leases. Another disadvantage for tenants is that these leases don’t typically have a lot of transparency. You’re trusting that the landlord isn’t charging you more than they’re paying for various services – or charging you for services you barely use. Why property owners can benefit from these leases These leases can be advantageous to property owners. For example, aside from the consistency of rental payments, they may be able to invest in energy-saving improvements to the building if the lease covers these utilities. The tenants are paying the same amount as they were at the beginning of their lease while the building owner is saving money. These savings can subsidize the improvements. Whichever side of the full-service commercial lease agreement you’re on, it’s crucial to understand the advantages and disadvantages, what is required of you and how it will affect your bottom line.

There are a number of types of commercial leases, as our readers likely know. One that isn’t talked about a lot is a full-service lease. These are most often used when leasing space in large office buildings. Basically, a full-service lease is similar to a gross lease. The costs of just about everything involved in maintaining the building are factored into each tenant’s monthly rent. This includes property taxes, insurance, utilities and common area maintenance (CAM). Advantages and disadvantages for tenants Many tenants prefer this kind of lease because it’s simpler. They have a rent payment every month that covers just about all of the expenses associated with the property they’re using. This can be a big advantage when budgeting. They can also avoid some monthly rate fluctuations – particularly if gas and electric costs are included. However, if you’re considering a commercial space with a full-service lease, be prepared to pay more than you would for other types of leases. Another disadvantage for tenants is that these leases don’t typically have a lot of transparency. You’re trusting that the landlord isn’t charging you more than they’re paying for various services – or charging you for services you barely use. Why property owners can benefit from these leases These leases can be advantageous to property owners. For example, aside from the consistency of rental payments, they may be able to invest in energy-saving improvements to the building if the lease covers these utilities. The tenants are paying the same amount as they were at the beginning of their lease while the building owner is saving money. These savings can subsidize the improvements. Whichever side of the full-service commercial lease agreement you’re on, it’s crucial to understand the advantages and disadvantages, what is required of you and how it will affect your bottom line.

Businesses and private investors in California know the value of commercial real estate holdings, thus prompting many to look for whatever opportunities become available to build up such properties. As is the case across all real estate segments, often the key to a property’s value is “location, location, location.” Yet when it comes to commercial real estate properties, zoning restrictions often bar them from certain locations. That may not stop a developer from falling in love with a particular location. Should one want to pursue the chance to develop a commercial property on a particular location, a zoning variance may be a possibility. Reasons for a zoning variance A zoning variance allows for the construction or development of a certain type of structure or property outside of the standard set by a parcel’s zoning laws. According to the website Bankrate.com, on top of gaining permission to build a new property in contrast of local zoning codes, another common reason for requesting a zoning variance include altering an existing property in a way that would change its current zoning classification. The zoning variance process in Los Angeles County With zoning ordinances set at the local level (specifically at the county level), a developer must seek a variance from the same authority. Per Section 12.27 of the Los Angeles County Municipal Code, the county’s Zoning Administrator can only grant a variance in the following scenario: Special circumstances seemingly warrant the variance A variance allows for the preservation and enjoyment of a substantial property in the zoned area Granting the variance would not adversely affect public welfare or the county’s General Plan (the policy informing future land use decisions) A lack of variance would impose a hardship contrary to the intent of zoning regulations If the issue of the variance affects public interests, the Zoning Administrator may make the variance hearing public.

Businesses and private investors in California know the value of commercial real estate holdings, thus prompting many to look for whatever opportunities become available to build up such properties. As is the case across all real estate segments, often the key to a property’s value is “location, location, location.” Yet when it comes to commercial real estate properties, zoning restrictions often bar them from certain locations. That may not stop a developer from falling in love with a particular location. Should one want to pursue the chance to develop a commercial property on a particular location, a zoning variance may be a possibility. Reasons for a zoning variance A zoning variance allows for the construction or development of a certain type of structure or property outside of the standard set by a parcel’s zoning laws. According to the website Bankrate.com, on top of gaining permission to build a new property in contrast of local zoning codes, another common reason for requesting a zoning variance include altering an existing property in a way that would change its current zoning classification. The zoning variance process in Los Angeles County With zoning ordinances set at the local level (specifically at the county level), a developer must seek a variance from the same authority. Per Section 12.27 of the Los Angeles County Municipal Code, the county’s Zoning Administrator can only grant a variance in the following scenario: Special circumstances seemingly warrant the variance A variance allows for the preservation and enjoyment of a substantial property in the zoned area Granting the variance would not adversely affect public welfare or the county’s General Plan (the policy informing future land use decisions) A lack of variance would impose a hardship contrary to the intent of zoning regulations If the issue of the variance affects public interests, the Zoning Administrator may make the variance hearing public.

If you own or rent a commercial unit in a building with other owners or renters, there is a good chance you have at least one party wall. Party walls are simply the walls between two or more separately owned properties. Keeping party walls in good condition is in the interests of all property owners. This is especially true when party walls act as fire barriers or provide structural support. Still, if a property owner on the opposite side of your party wall wants to renovate, you may encounter some conflict. Here are three ways to avoid party wall disputes. 1. Have a comprehensive party wall agreement Arguably, the best time to address party wall disputes is before they arise. With a comprehensive party wall agreement, all property owners understand their rights and responsibilities. Before you purchase a property that has an existing party wall agreement, your due diligence should include reading it. 2. Ask for professional help If you suspect another property owner may be damaging or neglecting the party wall, you may want to ask for professional help. A structural engineer may use laser technology to gauge the stability of the wall. He or she may also attach monitors that send automatic alerts when there is a problem. 3. Pursue alternate dispute resolution While you can probably sue to enforce the terms of a party wall agreement, you may not ever have to go to court. After all, your party wall agreement may include a provision for resolving disputes. If the agreement is silent on the matter, meeting with a neutral mediator may help you reach common ground with the other property owner. Alternate dispute resolution does not always work, of course. Ultimately, to safeguard your investment and your property, you may need to pursue all available options to protect your party wall.

If you own or rent a commercial unit in a building with other owners or renters, there is a good chance you have at least one party wall. Party walls are simply the walls between two or more separately owned properties. Keeping party walls in good condition is in the interests of all property owners. This is especially true when party walls act as fire barriers or provide structural support. Still, if a property owner on the opposite side of your party wall wants to renovate, you may encounter some conflict. Here are three ways to avoid party wall disputes. 1. Have a comprehensive party wall agreement Arguably, the best time to address party wall disputes is before they arise. With a comprehensive party wall agreement, all property owners understand their rights and responsibilities. Before you purchase a property that has an existing party wall agreement, your due diligence should include reading it. 2. Ask for professional help If you suspect another property owner may be damaging or neglecting the party wall, you may want to ask for professional help. A structural engineer may use laser technology to gauge the stability of the wall. He or she may also attach monitors that send automatic alerts when there is a problem. 3. Pursue alternate dispute resolution While you can probably sue to enforce the terms of a party wall agreement, you may not ever have to go to court. After all, your party wall agreement may include a provision for resolving disputes. If the agreement is silent on the matter, meeting with a neutral mediator may help you reach common ground with the other property owner. Alternate dispute resolution does not always work, of course. Ultimately, to safeguard your investment and your property, you may need to pursue all available options to protect your party wall.

Commercial tenants that outgrow a rental unit may find larger areas and move their operations there. Under an existing lease agreement, however, a tenant may still face liability for monthly rent payments. To avoid paying double rent, a tenant may find another business willing to take over the lease. As noted by the Los Angeles Daily News, when commercial tenants sublease, they remain responsible for the rent if a sub-tenant fails to pay. Landlords may also have some alternative options to consider. A property owner may reduce the risk of default A rental agreement may specify when a landlord may begin marketing a space to attract a replacement tenant. Depending on the amount of time left on the lease, a landlord may modify the unit to meet market demands and appeal to a long-term tenant. Rental units, for example, may become smaller to accommodate a number of different commercial tenants sharing what was once a much larger space. By offering less square footage at attractive rates, a landlord may find it profitable to terminate a lease rather than rely on a single tenant. Dividing the area may also reduce the risk of financial losses if any of the new tenants’ businesses fail and cause them to default. Creativity could result in new types of tenants As reported by CNN, some vacant shopping mall owners looked beyond traditional retail tenants and began offering empty spaces to different types of growing businesses. Doctors, schools and storage facilities have all signed lease agreements for space located inside shopping malls. The terms of a commercial lease may require some flexibility when market conditions appear uncertain. A lease may proactively highlight the conditions for modifying or terminating an agreement amicably. Avoiding landlord and tenant disputes could result in workable solutions that mitigate the risk of loss to both parties.

Commercial tenants that outgrow a rental unit may find larger areas and move their operations there. Under an existing lease agreement, however, a tenant may still face liability for monthly rent payments. To avoid paying double rent, a tenant may find another business willing to take over the lease. As noted by the Los Angeles Daily News, when commercial tenants sublease, they remain responsible for the rent if a sub-tenant fails to pay. Landlords may also have some alternative options to consider. A property owner may reduce the risk of default A rental agreement may specify when a landlord may begin marketing a space to attract a replacement tenant. Depending on the amount of time left on the lease, a landlord may modify the unit to meet market demands and appeal to a long-term tenant. Rental units, for example, may become smaller to accommodate a number of different commercial tenants sharing what was once a much larger space. By offering less square footage at attractive rates, a landlord may find it profitable to terminate a lease rather than rely on a single tenant. Dividing the area may also reduce the risk of financial losses if any of the new tenants’ businesses fail and cause them to default. Creativity could result in new types of tenants As reported by CNN, some vacant shopping mall owners looked beyond traditional retail tenants and began offering empty spaces to different types of growing businesses. Doctors, schools and storage facilities have all signed lease agreements for space located inside shopping malls. The terms of a commercial lease may require some flexibility when market conditions appear uncertain. A lease may proactively highlight the conditions for modifying or terminating an agreement amicably. Avoiding landlord and tenant disputes could result in workable solutions that mitigate the risk of loss to both parties.