Commercial Leasing in Washington State
Commercial landlords and tenants have dramatically different considerations from residential landlords and tenants. Commercial landlords, for example, must deal with longer lease terms, complex code regulations, and significant financial consequences stemming from the success or failure of their tenants’ businesses. These do not generally come into play for residential landlords, who deal with shorter term leases and generally less complex issues, but more a highly regulated statutory scheme and, arguably, stricter judicial circumstances.
Commercial tenants, on the other hand, have significant operating expenses, bear a greater responsibility for repairs, and often must address signage and appearance considerations, common area maintenance, responsibility for payment of taxes and insurance, all while having a relative lack of statutory protections when compared to residential tenants. In additional to all of this, landlords and tenants may each take on greater responsibilities depending on the circumstances, such as significant landlord or tenant improvements, that typically do not come up similarly in a residential context.
The numerous legal and financial issues that arise in commercial landlord-tenant relationships lend to not only much longer lease terms, but also far more extensive and complex leasing arrangements in terms of substance. These complexities take many forms, but one very common example is the Triple Net (NNN) Lease. While not required in all commercial leasing situations, many commercial tenants will find themselves in a Triple Net Lease, which has significant consequences. A Triple Net Lease refers to the tenant having responsibility for:
- Property Taxes: Local government (typically county) property taxes. Sometimes these payments will go to the landlord, while other times, such as in single-tenant properties, the landlord will ask the tenant to pay directly to the county.
- Insurance: Building insurance to cover property damage. This is different from a tenant’s own personal property insurance, which the tenant must obtain separately should the tenant desire that coverage (or should the landlord require it).
- Common Area Maintenance (CAM): Obligations to pay utility charges, as well as the costs associated with maintaining the common areas pertaining to the leased premises, such as parking lots, hallways, and landscaping.
Retail, industrial, office, and other types of business will often have different arrangements because of their unique particularities, and while many of them will have Triple Net Leases with comprehensive provisions, there is no one-size-fits-all. Similarly, litigation over commercial lease breaches can take on greater complexity as well, involving matters such as disputes over CAM responsibilities, landlord or tenant improvements, sizeable insurance claims, interference with business operations, and more. Disputes will also often take on different permutations depending on whether the tenancy involves a retail, industrial, or office space. As a result, understanding the numerous and nuanced issues in the commercial leasing context is critical to avoiding unwanted surprises.
Whether you are a commercial landlord or tenant, and whether you are negotiating a commercial lease or engaged in a dispute regarding your responsibilities under a commercial lease, consulting with a lawyer can results in very useful guidance through difficult circumstances. The attorneys at Beresford Booth have extensive experience representing both commercial landlords and commercial tenants in a variety of different transactional and litigation contexts. If you need assistance with any commercial landlord-tenant issues, the attorneys at Beresford Booth can help you. Please feel free to contact us at info@beresfordlaw.com or by phone at (425) 776-4100.
