What are Retail Leasing Laws?

Retail leases are agreements between landlords and commercial tenants. The lease is difficult to negotiate and agree upon, with some of the key problems concerning the terms, utilities and taxes, and repairs of the property.

Terms of the Retail Lease

Leases come with a fixed term, and possibly allow for extensions of the lease term for a specific time. The fixed term requires the tenant to make a minimum payment, and if they are not in default they have the right to extend the term. However, it is important that the lease states exactly when these designated times are, and at what point an extension of the term goes into effect.

Utilities and Taxes Regarding the Property

Whether the tenant pays the building’s utilities depends on the type of the building. If the building contains multiple tenants, then the tenant defined in the retail lease only pays their actual share of the utilities. On the other hand, if the property is a freestanding building, then the tenant must pay for all of the associated utilities. However, the payment of taxes is slightly more straightforward. The landlord is required to pay all taxes for the property, regardless of its type. Although if the tenant creates improvements that are taxable (and not required by the landlord) then the tenant must pay all of the taxes for those improvements.

Repairing the Property

The responsibility of repairing the building has two components. If the repair is structural, then the landlord must do so. However, if the repairs are non-structural, then the tenant must pay for the repairs. The tenant should carefully review the lease so as to make sure they are responsible for the correct repairs, and to return the property in the specified condition.