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 as 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.
The law governing commercial leases varies from state to state but generally consists of a state's contract law (as applied to the lease agreement)—and in some states, includes the statutes enacted by the state's legislature that specifically apply to commercial tenancies, or that generally apply to both residential and commercial tenancies.
In Texas, a business that intends to lease commercial space—such as offices, warehouses, or retail locations—will typically enter into a commercial lease agreement. Unlike residential tenants, commercial tenants are presumed to have greater knowledge and sophistication in business matters, and therefore, Texas law does not afford them the same level of statutory protection. Commercial lease agreements are governed primarily by Texas contract law, and the negotiation of terms is largely left to the parties involved. It is crucial for the tenant (lessee) to thoroughly review and understand the lease agreement, as it can significantly affect the business's operations and financial health. Tenants are encouraged to negotiate terms and seek any necessary protections before signing the lease. While there are some statutes that may apply to commercial tenancies, they are not as comprehensive as those covering residential leases, emphasizing the importance of due diligence and possibly seeking advice from an attorney during the leasing process.
