Commercial property owners and their tenants have an interesting relationship. It's great when it works, but it can get sour when it doesn't.
Knowing the most common quarrels is vital. Doing this helps you anticipate these issues and maybe prevent them, which should always be the goal.
Common Issues Between Landlords and Tenants
Issues happen and can get expensive for both parties involved. Anticipating these issues can save a ton of grief and cash. Most problems could be prevented if the tenant reads the entire lease before signing, but agreements are lengthy and complicated.
Maintenance and Repairs
No one wants to deal with repairs and general maintenance expenses. These are quite costly, so it makes sense that no one wants to fork up the cash.
Typically, the landlord deals with issues with the property's exterior and structural issues. This leaves everything else to the tenants, but this isn't something your tenants want to hear. Each contract is different — some could ask the landlord to take care of more things, like the plumbing. It's up to the tenant and landlord to agree about who's responsible for what before the contract is signed.
CAM Charges
A commercial lease asks the tenant to pay more than just the rent. Sometimes, the tenant has to deal with their portion of Common Area Maintenance or CAM Charges, as well as their portion of the landlord's insurance and the property taxes.
The problem is that CAM charges and other similar charges can spike the rent abruptly. If the landlord decides to fix the roof and says that it's a CAM charge because the roof benefits the tenant, this will spike the rent — and this is why a dispute may happen. It's best to reduce the possibility of rent spikes.
Rent Withholding
You'll likely never find a lease that allows tenants to withhold rent from landlords. Usually, somewhere in the lease, it states that withholding rent could result in an eviction.
While this may be true, some tenants will still threaten to withhold the rent because they believe the landlord isn't complying with the lease agreement in some fashion. What they can do instead is deposit the rent in an escrow account until disputes are settled. Wise landlords hire a commercial property management team to address issues promptly to prevent these sorts of actions.
Assignment Issue
Another problem that arises in these sorts of arrangements has to do with assignments — who has the right to assign a new tenant. This involves the tenants' ability to sell their business to another entity, which then becomes the new tenant.
The landlord usually has to approve tenants, so this predicament is strange since anyone could buy a business. Normally, the tenant has the final say whether the buyer can become the new tenant or not, and the landlord can ensure a smooth transition by writing this into the contract.
Renewing
Business owners usually like to feel out an area. If the location is good, they'd like an opportunity to renew their lease. The problem is that some tenants forget to pay attention to what this means — the landlord may require notice if the lease will be extended, and the lease isn't always renewed automatically just because rent is paid.
If tenants overlook what it takes to renew their lease, the landlord could take advantage. If the market is good, they could use this as an opportunity to raise the rent considerably.
Now you know some of the most common quarrels that could happen between landlord and tenant. Hopefully, these points help smooth out this relationship a bit more.
