Commercial Landlord Responsibilities In A Commercial Lease

The legal relationship between a property owner and a tenant is an important one and, subsequently, commercial leases are some of the most critical contracts in the business arena. A commercial lease establishes the corresponding responsibilities of both the landlord and tenant.

While lease negotiations may lead to delays in the legal agreement’s execution, they can also be important in protecting the respective interests of the parties as well as clearly establishing the rights and responsibilities of both the landlord and the tenant.

Key Points

Lease clarity: define rights & responsibilities, incl. building codes, structural repairs, asbestos, and insurance.
Structural & systems: landlord typically covers foundation, roof, exterior walls, and major systems (heating, electrical, ventilation).
Access & privacy: landlord may keep a key but must give appropriate notice before entry.

What is a Landlord Responsible for in a Commercial Lease?

In regard to a residential property, whether it be a home or apartment building, it is usually the landlord’s responsibility to carry the costs associated with the maintenance and operation of the building. In some instances, the landlord may even pay for gas and water fees instead of the tenants carrying such costs. On the other side of things, in a commercial lease, many of the costs associated with a building end up being transferred to the tenant and billed as additional rent. This is a rental fee on top of the base rent rate.

Commercial leases include full-service, net, and percentage types. In a full-service lease, tenants pay base rent while landlords cover expenses like utilities, insurance, and taxes. Full-service leases typically have higher rent.

The landlord’s responsibilities in the landlord-tenant relationship should be detailed in the commercial lease. The terms should be carefully spelled out so that the tenant and the landlord understand their relative rights and responsibilities.

For example, the commercial lease should state which party is responsible for:

Ensuring the facility is in full compliance with both state and local building codes
Meeting minimum energy efficient standards
Making structural repairs to the building
Managing any potential asbestos outbreaks
Covering the cost of maintaining commercial property insurance

Generally speaking, the commercial landlord responsibilities should include maintaining the integrity of a building’s exterior. This includes maintaining the roof and exterior walls. It also often includes responsibility for snow and debris removal on sidewalks that surround the building. In some cases, however, a commercial lease will shift these responsibilities onto the tenant. Within a commercial lease, a landlord may even delegate responsibilities of complying with the Americans with Disabilities Act. Getting the building into compliance could be costly and total thousands of dollars.

Again, generally speaking, a landlord will usually carry the responsibility for maintaining the structural integrity of a building. This would make the landlord responsible for maintaining the foundation of the building in addition to the walls and the roof. Furthermore, landlords, pursuant to the commercial lease, will often carry the responsibility of maintaining key systems in the building, such as the heating, electrical, and ventilation systems.

Landlords will often prefer to retain control of seeing to the major repairs a property may need. Failure to make such repairs can, of course, lead to liability exposure and be financially costly if not properly attended to. It is permissible, however, for a landlord to allow a tenant to address structural issues in regard to property.

A landlord is entitled to a key to the rental unit because they own the property. However, laws require landlords to provide appropriate notice before entering, ensuring tenant privacy and compliance with regulations.

Work With Our New York City Real Estate Attorneys

Make sure your best interests are protected in your commercial property lease. Woods Lonergan’s real estate attorneys can develop a strong commercial lease agreement that clearly spells out the rights and responsibilities of everyone involved. Contact us today.

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About the Author

James F. Woods is Founder and Managing Partner of Woods Lonergan. He has tried more than 60 jury cases to verdict as first-chair trial counsel, beginning his career as a prosecutor, and resolves complex commercial and real estate disputes valued at $1M to $100M+ for business owners, principals, and middle-market enterprises across the New York metro area. He appears regularly in the New York Commercial Division and in the federal district courts for the Southern and Eastern Districts of New York, and has argued appeals in the Appellate Division and the Second Circuit.

His practice covers complex commercial litigation, real estate and asset litigation, partnership and shareholder disputes, fiduciary breach and corporate fraud, and cooperative and condominium governance. He counsels corporate and cooperative boards throughout New York.

The Legal 500 United States ranks James in its New York Elite rankings for Commercial Disputes, and his peers have recognized him with Martindale-Hubbell's AV Preeminent rating. Woods Lonergan is ranked in Chambers USA: Spotlight New York for Litigation: General Commercial and Real Estate. James serves on the Commercial & Business Litigation Committee and the Business Torts & Unfair Competition Committee of the American Bar Association Section of Litigation, and on the Cooperative & Condominium Law Committee of the New York City Bar Association. His commentary on New York commercial and real estate disputes has been quoted in The New York Times, The Washington Post, Bloomberg Law, Law360, and Forbes.