Lober Dobson & Desai LLC
Attorneys at Law
Atlanta | Macon
LANDLORD / TENANT LAW - PART II
Last month, we looked at the different issues that cause the landlord-tenant relationship
to become problematic – from the landlord’s perspective. This month, we will
take a look at the some critical issues that tenants face. Whether the tenant is a college
student or a large corporation, leases can be quite complicated and unless you as a tenant
have a good grasp on what you are looking for, the lease agreements appear to be just
a great deal of verbiage. Something to keep in mind when reviewing either type of lease
is that it was likely prepared by an attorney hired by the landlord, or at the very least
prepared by the landlord himself. Regardless of who prepared it, it will usually be favorable
to the landlord’s interests rather than the tenants.
There are two main categories of tenants: residential and commercial.
These two classes of tenants often have extremely different leases and different concerns.
While some of their concerns may be the same, the two types of leases are treated very
differently by the law.
The residential tenant is most concerned with issues like:
- Who will
fix the plumbing or heater if it needs repair?
- What if I want to sublet
- What happened to my security deposit?
As a residential tenant, you may
not be looking for a very permanent commitment, but for the time that you
are bound by the lease agreement, you should know what your responsibilities are as opposed
to the landlords’.
Pay special attention to who is responsible for repairs. Make sure your lease clearly states
who will repair problems with heat, water, sewer, etc.
Also, look at the parts of the lease that talk about whether you as a
tenant have the right to sublet. The landlord may try to discourage you from
subletting by adding on extra fees and landlord approval before you can sublet
your leased space. There may also be hefty penalties if you sublet without notifying the
landlord. Subletting may be a good option if you are a college student going home for the
summer or are moving in the middle of your lease, but you may still be on the hook if the
person subletting does not pay his rent.
Finally, make sure you know where your security deposit is going and
under what circumstances the entire amount will not be returned to you. In
many states, the landlord is required to notify you as to where your money
is being held, often times in a separate account. In many instances, that money cannot
be touched unless the landlord provides you with a checklist at the beginning of your lease
where you approve the condition of the premises and mark anything that you believe is damaged
or in need of repair and provides you with a list of defects at the end of your lease.
If you do not receive the full amount of your security deposit back and you believe you
are entitled to it, you should look at the landlord-tenant laws in your state to find out
the procedure for getting your deposit back or and/or contact a local attorney for assistance.
Very often tenants assume that the landlord is entitled to keep the security deposit resulting
in tenants foregoing money that they are entitled to.
On the other hand, a commercial tenant is more concerned with:
- How much will I have to pay to terminate my lease in case my business
doesn’t go as well as I hope?
- What if a new landlord buys out the retail space I
am renting? Can he kick me out?
- What happens if I don’t have enough money to pay
As a commercial tenant, you are more concerned with the nuances of
the lease that will affect your bottom line. Because there is always the risk of your
business not doing as well as you had projected, you want to make sure that you know
what getting out of your lease entails. There is often an acceleration clause built
into leases meaning that you will owe rent for the remainder of your lease period if
you terminate early. That lease period could be several years!
The commercial tenant should also be concerned about asking another “what if…” question.
What if the landlord sells the shopping center or strip mall to someone else? What will
happen to my lease? This is a very valid question and too often leases do not have the
subordination, nondisturbance and attornment clauses that they should. These clauses
will protect the tenant’s lease and will require that in the event the landlord
assigns the lease to a new landlord, the tenant’s lease will remain under the same
terms as prior to the assignment. Without these clauses, what you thought
was a 10 year lease may be abruptly terminated by a new landlord.
Finally, going back to the business purpose of the lease, what happens
if the commercial tenant does not have enough to pay its rent? Like residential leases,
if the tenant does not have enough to pay, the landlord can initiate dispossessory proceedings
against the tenant in an effort to evict him and collect past due rent and damages. Check
the language of the contract to determine what events will cause you to be in default
under the lease, how much notice the landlord has to give you to cure the default and
what the landlord is entitled to if you fail to cure the default and the lease terminates.
Irrespective of what type of lease you have, you should always try to
keep the communication lines open with the landlord or manager. Addressing the issue
is always better than hiding behind the curtain of denial. Finally, like any other contract
or agreement, leases are ALWAYS NEGOTIABLE. Do not assume that they landlord will only
let you rent the premises if you agree to each and every term in the lease. Negotiate
the terms that are troubling to you so that both parties are satisfied. The landlord
has an interest to rent the space just as much, if not more, as you have an interest
in leasing it.