Commercial Lease Agreements vs Residential Leases

Commercial Lease Agreements vs. Residential Lease Agreements

California commercial  lease agreements and residential lease agreement have a few major differences between them. In California, there are a few legal protections available for commercial leases in comparison to residential lease agreements. For instance:

• Consumer Laws: Many consumer laws which apply to residential lease agreements do not apply to commercial leases. California state laws provide less legal protection to business owners against consumer protection against dishonest landlords because  it is assumed that business owners are more knowledgeable people.

• Negotiable Lease Terms: Landlords of commercial leases usually allow business owners to negotiate more flexible lease terms in order to accommodate each business tenant. Unlike residential terms which are not as negotiable however, many California state laws have been enacted to protect residential lease agreements from including discriminatory or unlawful terms in their lease agreements.

• Residential Lease Agreements Generally Longer Terms: Many California commercial lease agreements have long terms, such as several years. While, on the other hand, in most cases residential leases are for no longer than a year or are month-to-month.

• Commercial Lease Requires Liability Insurance: Landlords of commercial leases usually require business owners to carry commercial liability insurance in the event someone is injured on your premises or some type of loss occurs. Often times commercial landlords will require that business owner to include their landlord as an named insured on the policy. However, the lease times under liability insurance may not require the landlord to include the business tenant as a insured. It is recommended that you negotiate those terms and request that the landlord also include your business as a named insured on the landlord’s insurance policy.

Before signing a commercial lease agreement, it is vital that you review all the terms and ensure that the terms included in the lease agreement will meet the needs of your business. Failure to review the terms thoroughly prior to committing to and signing a lease can lead to unfortunate consequences in the future. Thus, if you are a business owner and wish to enter into a commercial lease agreement it is vital that you have a experienced Glendale business attorney review your commercial lease agreement prior to signing in order to avoid adverse consequences in the future.

• Attorneys Fees Clause: Generally in California, Attorney’s fees provisions means that in the event of a law suit or dispute each party bears its own attorney’s fees. While there are exceptions to this general rule, if a commercial lease provides that the prevailing party will recover its attorney’s fees and costs, generally that provision is enforceable, assuming that the matter is litigated to judgment. California Civil Code §1717(a) makes attorney fee clauses or provision binds both parties to the clause. Attorney’s fees will be provided to the prevailing party regardless of language limiting the right to one party. In other words, if the lease contains an attorney’s fee clause, a prevailing party/tenant will be awarded attorney’s fees even if the lease only discusses an award of attorney’s fees to the landlord.

These are only a few things a business owner should consider when entering into a commercial lease agreement. Our experienced business law in Los Angeles, CA are available to review for your commercial lease agreement and consult with you on which provisions need changes to ensure you rights are protected.  Call (310) 943-1171 and speak with a Los Angeles business law attorney. We are available 24-hours a day.

KAASS LAW is authorized to practice law in California. The above content is intended for California residents only. This content provides only general information which may or may not reflect current legal developments. KAASS LAW expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this website. The above content DOES NOT create an attorney-client relationship. KAASS LAW does not represent you unless you have expressly retained KAASS LAW in person at the KAASS LAW office.

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