When Your Landlord Suddenly Changes Lease Terms
As a business owner, your workspace real estate can be just as important as your product or service. But when landlord suddenly changes lease terms, it can create chaos and confusion. For many entrepreneurs, leasing an office building space for their business is a complex multi-step process. Before signing a commercial lease, you not only need to consider workplace amenities, office common area atmosphere, and how much space you need, but also an ideal commute, affordable rent, and specific type of commercial lease.
Unfortunately, some of us will inevitably find ourselves in a position where our landlord backs out, goes against their word, or violates the lease agreement. In a situation like this, don’t immediately freak out. There are several paths forward from here, and it is up to you to carefully weigh the costs and benefits of each option. In this post, we’ll be covering a few options for what to do and how to respond when your landlord violates your lease.
What Are Your Rights as a Tenant?
As a business tenant, you are entitled to rights that differ from residential tenants’. Here are 3 important ones to always keep in mind.
1. Right to Your Lease Term
Under the law, all small businesses have the right to run their business for the length of the lease, unless you breach your contract. This is a crucial right to keep in mind should your landlord decide to kick you out or try to change the original lease agreement. Like other tenancies, your landlord cannot evict you from the property without just cause. At the same time, if your lease agreement does not specify an expiration date, your landlord is required to give you a 30-day written notice.
2. Right to Privacy
Any business renting a commercial space has the right to privacy. You are entitled to operate your business any way you wish, as long as whatever you are doing is legal. The landlord cannot prevent you from operating your business, or from allowing guests or clients on the property. In the same vein, landlords must give you reasonable notice and obtain your permission before they enter the property. But keep in mind that as a tenant, you cannot unreasonably prevent your landlord from entering and visiting the property.
3. Right to Workplace Maintenance and Upkeep
The law requires that the landlord maintain the condition of the property. The extent of the upkeep varies from state to state, but generally your landlord is responsible for fixing any plumbing, electrical, and structural problems that come up. However, as a tenant you must keep the building in the same condition in which you entered it. If you want to make changes, communicate with your landlord first to avoid disputes.
A Note On Waiving Your Business Tenant Rights
While this may not be a common, some commercial lease agreements may have clauses that give landlords more rights than the law entitles them to. As a tenant, always know that a lease agreement cannot strip you of tenancy laws that are state or federal law. Your landlord cannot force you to give up your legal rights, and should you catch a clause that forces you to, consider it void. Carefully read all documents and contracts before you sign. Don’t put your rights in jeopardy!
1. Move Out
If your landlord suddenly changes lease terms, it nay be an opportunity to move on. First and foremost, your primary concern should be to protect your business and ensure that it continues to run smoothly. If your landlord violates your contract, your first thought should be how you can continue to run your business without being constrained by the logistics behind your office space.
The decision to completely move out involves several careful considerations.
- First, you must consider that regardless of how your landlord changed or violated the lease agreement, you still signed the lease at the beginning. This means the landlord has the potential for a legal claim against you, despite you not doing anything wrong.
- Second, you are most likely legally obligated to pay rent for the remainder of the lease term, unless your agreement provides a way out of the commercial property. For this consideration, preparation is key: Make sure you are getting a fair lease agreement from the get-go, with a viable exit strategy as well. We recommend having a qualified professional, such as a lawyer, carefully read any contracts before you sign them. Always double check!
- Finally, in some states it is the landlord’s responsibility is to rerent the office space, but sometimes the landlord can hold tenants responsible for the costs of advertising and showing the unit, or even finding a new sublease. Even though some landlords have leasing agents doing this for them, the responsibility could still fall on your shoulders.
The biggest benefit of moving out is that it allows you to do new research on what kinds of other commercial spaces have opened up since you signed your last lease. Who knows, you could find an even better lease with a better landlord! If you run a grocery store, consider a retail space where you are paying similar rent per square foot, but instead gain higher foot traffic at your storefront. Alternatively, if your commercial lease is in an office building, perhaps the common area is larger, cleaner, and has better air flow and natural lighting. Either way, familiarizing yourself with the market’s current choices on square feet, base rent, or common area maintenance can be beneficial even if things are running smoothly.
At the same time, make sure you have a plan on how your business can continue to run despite this transition. A well-developed business continuity plan prepares you for any unexpected events that may impede you from running your business.
From a bird’s-eye view, perhaps the biggest benefit to moving out is the fact that you’re able to distance yourself from your landlord. When they violate the lease agreement, it not only is an on-paper violation but also a violation of trust. Allowing a violation of the lease to go unnoticed and unmentioned opens up opportunities for repeat offenses in the future, such as unreasonable rent increases. The bottom line is that sometimes, it’s best just to leave.
2. Stay and Negotiate
When your landlord suddenly changes lease terms, you may decide to find common ground. If the office space you’re leasing for your small business is ideal in every way aside from your landlord’s behavior, it might be worth trying to negotiate, especially if the idea of finding another commercial space and moving your entire team is not ideal. However, it is also important to not be stepped on by your landlord. Regardless of whether you are signed to a long-term lease or short-term lease, hold your landlord accountable to what you both agreed on originally!
As a small business tenant, a good rule of thumb is to document everything. Keep records of not only your lease agreement and monthly rent payment receipts but also all communications between you and your landlord, as well as pictures of the commercial space and common areas if necessary. This gives you factual information to present to your landlord during negotiation. Your documentations of the violations should be as detailed as possible. Explain any history of the problem, as well as your concrete attempts to resolve the problem.
When you are ready for negotiation, there are a few key points to prevent unnecessary tension.
- Be polite! Respecting your landlord despite any violations or concerns is an important first step to making sure both sides get what they want. However frustrating the situation is, make sure you are level-headed and calm.
- Start the conversation early. Don’t wait until it’s too late to negotiate, or too late to act because your lease ends soon. Quick action leads to quick results, especially in a situation involving property and rent.
- Be open to compromise. Obviously you and your landlord have differing priorities, but the point of negotiation isn’t to make one side happy, its to arrive at a harmonious middle ground between both parties. Carefully consider what you’ll give up or gain, and step into your landlord’s shoes as well to consider how fair your offer is.
- Negotiate in person, follow up in writing. Face to face negotiation is the only way to negotiate, and follow up thank you emails should not only express gratitude but also reiterate your “ask” as well.
- Stand your ground. Never give up too much for the sake of pleasing your landlord, and never let go of too much control over your office in an attempt to help your business survive. Both parties should make themselves heard, and also carefully consider the valid offers or demands of the other.
In the future, it is extremely important to make sure you are reading your lease agreements carefully. If you are a new business considering a new real estate lease, your operating expenses and rent costs should be your top concerns. Be aware of a type of lease called a single net lease, which is one that not only includes the each month’s rent, but also property taxes as well. Again, always have a lawyer read your lease contract over so you know exactly what you’re agreeing to, as well as what hidden obligations there may be. Aside from property taxes, your lawyer might also tell you about other small business taxes that you are required to pay as well.
3. Sue Your Landlord
If your landlord suddenly changes lease terms you mat need to resort to legal action. Sometimes, it might be a good option to sue your landlord for more serious violations. This approach requires a lot of work, time, and effort, but it can have big payoffs as well. First, you must consider if it is worth it to sue your landlord. Most likely, you’ll be heard in a local civil court, and will also have to pay court fees, lawyer fees, prepare a case, and also defend yourself in front of a judge. Keep these costs in mind as you plan your next move.
If you’ve decided to move forward, what actions are grounds for a lawsuit?
- Your landlord is unresponsive and doesn’t communicate. If you have tried to contact your landlord about lease violations, uninformed lease changes, or unpaid security deposit refunds and are met with silence, a lawsuit is a viable path forward.
- You have proof of the violation. If you have the lease agreement and pictures, call records, or email histories of the violations, your chances of winning in court are significantly higher.
- You’re owed money that you haven’t received. If you had to undergo a repair or had to replace office equipment out of your own pocket and your landlord refuses to give you your security deposit back, it might be worth it to sue your landlord and make sure your landlord pays.
Even if you have documentation of violations, civil court laws vary by state. There are many technicalities involved in suing your landlord. To learn more about the process, try doing some preliminary research online. Then, once you think you may have a case, contact a local attorney who specializes in civil suits, preferably commercial ones. They will be able to provide you with the most accurate information regarding state regulations, laws, and whether or not your case will hold up in court. Even if you decide not to pursue legal action with an attorney, speaking to one will give you a better idea of how to proceed. Many attorneys even offer free preliminary consultations.
If you do decide to go to court on your own, you will need to prepare your case. There are steps you can take to make sure your case is airtight.
- Have plenty of evidence. We’ve covered this above, and will continue to reiterate it.
- Have witnesses. You are not required to ask coworkers to appear in court on your behalf, but a great middle ground is a well-written letter from a witness. The more detail the better, as this is your chance to bring in a third party opinion that could significantly strengthen your case.
- Practice. This sounds self-explanatory, but make sure you’re covering all the details in your case as clearly as possible. Practice builds confidence in your position, and also helps you gain feedback on your claims.
If you do decide to go to court with an attorney, the process will be a little different. In some states, hiring a lawyer may not be allowed if you’re suing in a small civil court. Also, consider the fact that it is often difficult to break even with hiring a lawyer and any potential damages your landlord has to pay. More often than not, hiring a real estate attorney is only worth it if you’re suing for a large amount or if the lawyer agrees to work for a small fee.
At the same time, reflect on how comfortable you are defending yourself. Many civil cases are conducted without lawyers present, so if you’re comfortable talking in front of a judge and have plenty of evidence, you’ll not only save money but also time if you represent yourself.
4. Stay and Let It Go
Consider this option an absolute last resort. If your landlord suddenly changes lease terms or violates the lease terms, sometimes you may just be powerless to resist. As a new business, it might best to grit your teeth and push through until the end of the lease. Whether it be an inconvenient time to search for other places to rent, or if the rent in other office spaces is way too expensive, a variety of things can add up to you just deciding to stay put.
However, it is best to still communicate with your landlord. Making yourself heard is the first step to changing things in this situation. Even if you decide to stay, make the landlord both aware and responsible for the changes they made.
In any situation where your landlord suddenly changes lease terms on you, kicks you out, or violates your lease agreement, it’s really important to not overreact. Instead, approach this situation with a calm demeanor and a plan in mind. You have many options for how to move forward, from moving out and leaving this situation behind you to suing your landlord for said violations. Regardless of what you decide to do, carefully consider everything involved. And always document everything.