A business that leases real estate and improvements (buildings, etc.) in the form of space for offices, a warehouse, a restaurant, a nail or hair salon, a clothing store, a coffee shop, or other commercial (nonresidential) space will usually be required to sign a written contract known as a commercial lease agreement.
The tenant (the business occupying the space) who signs a commercial lease agreement is generally expected to be a more savvy, sophisticated, and informed tenant (also known as a lessee) than a tenant in a residential lease, and the law usually does not provide a commercial tenant with the same protections as residential tenant receives.
Because the law does not provide a commercial tenant with many protections, it is up to the commercial tenant to read, understand, and negotiate protections in a proposed lease agreement before signing it, as most every paragraph in a commercial lease agreement can have a significant impact on a business’s operations and financial stability.
A commercial landlord’s responsibilities are generally determined by the specific language in the written lease agreement and the state's contract law.
Contract law in most states recognizes an implied duty of good faith and fair dealing between parties to a contract, and a landlord who does not perform its responsibilities under a commercial lease in good faith or who is not fair in its dealings with the tenant may be in breach of the landlord’s implied duty of good faith and fair dealing.
In Texas, businesses seeking to lease commercial spaces such as offices, warehouses, or retail locations are required to enter into a commercial lease agreement. Unlike residential tenants, commercial tenants are presumed to have greater knowledge and sophistication in business matters, and thus, Texas law does not afford them the same level of statutory protections. It is crucial for a commercial tenant to thoroughly review, understand, and negotiate the terms of the lease agreement to secure necessary protections, as the lease terms can significantly affect the business's operations and financial health. The obligations of a commercial landlord in Texas are primarily dictated by the lease agreement itself, supplemented by Texas contract law, which includes an implied covenant of good faith and fair dealing. This means that a landlord must act honestly and fairly in the performance of their duties under the lease, and failure to do so may constitute a breach of this implied duty. An attorney can provide invaluable assistance in reviewing and negotiating commercial lease agreements to ensure that a tenant's interests are adequately protected.
