Tenants and Landlords: Who is Responsible for What?

A commercial lease agreement not only cements your rights to a property but also outlines the division of responsibilities between tenants and landlords. During the negotiation process, your commercial real estate broker can help you delineate responsibilities, restrictions and tenant rights in order to secure a favorable lease. By clearly understanding your landlord’s responsibilities and your rights as a tenant, you can avoid costly and contentious legal battles in the future. To familiarize yourself with division of responsibilities, read through some common lease terms that are outlined below.

• Maintenance: The burden of maintenance responsibilities vary under differing circumstances. Generally, landlords are responsible for the cost of structural repairs while tenants are culpable for the wear and tear caused by factors like foot traffic. Your commercial broker or tenant representative can help to clearly define maintenance responsibilities in your lease agreement.
• Upgrades: Before signing a lease for a new property, consider your short and long-term goals in order to determine the office amenities and characteristics you’ll need. If you choose to upgrade a space, you will likely be responsible for the renovation or construction expenses. The cost of government-mandated upgrades, though, like those outlined in the Americans with Disabilities Act, usually fall to the landlord.
• Utilities: Because energy consumption and waste production is greater with businesses than with residents, utilities can be a major point of contention in many commercial leases. A commercial lease should clearly state who pays the utilities and include information about how each utility is metered. In order to ensure that the utility clause of your lease is fair, work with a commercial real estate broker with the experience and expertise to help you achieve fair outcomes.

For more information about commercial real estate, please contact Tom Pappas. As managing director at Studley, Inc., Tom specializes in strategic planning within the Denver market and develops real estate strategies to help his clients make sound commercial real estate decisions. Visit us online or call Tom today at (720) 259-1809.