Commercial Lease Dispute

Commercial Lease Disputes in California

A commercial lease dispute typically involves a disagreement in interpretation of the contract terms between landlord and tenant. Most commercial leases are thorough and detailed, however, disputes can arise in many different instances, including: interpreting the language of the lease contract, defining the parties duties under the lease, addressing issues outside the lease provisions, or defining responsibilities of a new owner. Any of these, and many other, disagreements between landlord and tenant can give rise to commercial lease disputes and even litigation.

Commercial Lease Contract Terms

If every possible scenario was covered by the commercial lease contract between landlord and tenant, there would be very few commercial lease disputes. In the real world however, it is not possible for a commercial lease contract to cover absolutely everything (although many try). Many terms are easily addressed, such as:

  • Term of the lease
  • Amount of the rent
  • What type of business can be operated
  • Who is responsible for repairs
  • Deposit
  • Termination
  • Renewal of Lease
  • Subleasing

However, even within each category above, it is common for disputes to arise. For example, renewal of the lease can be a very specific procedure in the lease, which can lead to controversy as to whether a renewal was effectuated properly. The amount of rent seems easy enough to define, but many commercial leases use complex formulas based on the businesses financial statements and profits to determine exact rent amount, and disputes can arise…and these are the straightforward issues. Many other issues, which are outside the scope of the commercial lease can give rise to even more confusing disputes. In any event, it is always important to have a commercial lease attorney representing your interests throughout any dispute or litigation and at the earliest stage possible.

Commercial Lease Litigation

In commercial lease matters, the stakes are always high. A loss of even one month of rent can be significant for a landlord, and the cost of repairing a commercial building can run into the hundreds of thousands for even routine work. For tenants, many spend significant amounts of money constructing their business operations just how they want them, relying on their ability to stay at that location for the long term, or renew their lease down the road. For these reasons any commercial lease dispute between landlord and tenant can be significant not only in terms of costs, but also in terms of business impact.

Impact of Foreclosure on Commercial Leases

Recently we have seen a tremendous increase in commercial lease litigation relating to a building being sold, transferred, or foreclosed. Tenants who have invested tremendous amounts of money in a particular building or location are faced with a new owner seeking to evict them and wrongfully void their lease. From a landlord’s perspective, being locked into a long term lease under market value can negatively impact not only the value of the property, but also the ability to get financing for needed repairs and maintenance. Oftentimes in a foreclosure purchase scenario, there isn’t even any way to know what the terms and nature of leases are before purchase. Accordingly, this scenario frequently gives rise to disputes and litigation.

Handling Complex Commercial Lease Cases

McFarlin LLP is uniquely qualified to handle commercial lease litigation matters with a background in business litigation as well as real estate and foreclosure law. In many instances, contract law will govern the dispute; however, if a term is not specified satisfactorily in the lease, real estate law takes over. Our Irvine real estate litigation attorneys have handled hundreds of similar matters and will find you the best solution. We offer a free case analysis and evaluation so you can be 100% comfortable before engaging the firm. Call us today at (888) 728-0044.

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Timothy McFarlin

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