What Types of California Commercial Leases Are There?
There are three basic types of commercial leases in California, gross, net, and modified gross.
- Gross Lease - A gross lease requires the tenant to pay the landlord a flat fee for use of the property, inclusive of costs paid by the property owner, such as insurance and real estate taxes.
- Net Lease - A net lease requires the tenant to pay the flat fee plus other costs. A single net lease requires payment of rent and property taxes. A double net lease includes rent, property taxes, and insurance. A triple net lease includes payment of rent, property taxes, insurance, and maintenance.
- Modified Gross Lease - A modified gross lease is common for office buildings and other shared rental spaces. Besides the basic rent, the tenant may pay a share of other costs, such as taxes, maintenance, utilities, and insurance, typically proportional to the tenant’s share of the space leased.
Besides the basic type of lease, landlords and tenants must consider the rent and the terms of the lease, including rent amount, payment schedule, the habitability of the property, permitted uses, property access, maintenance and repairs, and more.
An experienced real estate attorney can help you decide which type of lease is best for your circumstances, whether you are the landlord or the tenant. They can also help craft the specific terms of the lease to ensure it is enforceable.
What Are My Rights as a Tenant?
Commercial tenants enjoy fewer protections under California law than residential tenants, although they are required to maintain a safe and habitable property. If you fail to adhere to the terms of the lease, a landlord must give you three days from the date of notification to remedy the situation. Failure to remedy in those three days may lead to the landlord’s filing of an unlawful detainer complaint with the court. If granted, you will have five days to vacate the property. A landlord is not allowed to evict you by force. Only the court can order you to vacate if you refuse to do so. Landlords are not allowed to change locks, remove your property from the premises, or bar you from use of the property until a trial is concluded and the court issues an order.
What Are My Rights as a Landlord?
As a landlord, you have the right to expect your tenant to comply with all terms of the lease agreement. Although you are not allowed to violate California or federal anti-discrimination laws and may not evict a tenant with court intervention, you have the right to due process should your tenant fail to pay rent on time or adhere to all other terms of the lease.
What Can I Do If I Have a Dispute?
Commercial lease disputes happen. Common disagreements occur over the interpretation of lease terms, renewal rights, options and obligations, permitted uses of the property, the eviction process, and engagement of escalator clauses.
Remedies for disputes include eviction as prescribed under California law. A landlord may also sue for monetary damages, including rent not paid for the term of the lease or for property maintenance, and limited to the landlord’s duty to mitigate those damages by leasing to a new tenant. The court could also order equitable relief by ordering one party to comply with a specific term of the contract.
Work with An Attorney You Can Trust
California courts assume that if a provision is not specifically addressed in the lease, not addressing it was intentional. That is why it is so important for landlords to have thorough and detailed leases crafted by an experienced real estate attorney. As a tenant, it is important to have an attorney review the terms of the lease prior to signing it. If a dispute arises, hiring a knowledgeable attorney will be critical, no matter which side of the lease you are on.