Commercial Landlord-Tenant Law in Atlanta
Georgia landlord-tenant law is based on state statutes and general principles of contract law. The exact terms of a typical commercial lease can vary greatly, depending on the terms that commercial landlords and tenants are willing to accept in any given situation. If you are a prospective tenant, signing an oppressive commercial lease agreement can doom your business from the start. If you are a landlord, a bad commercial lease agreement can burden you for years to come.
In Georgia, the total tenant cost for a commercial lease normally extends well beyond the monthly rental fee. Exact amounts are subject to negotiation, and some items that are common to commercial leases can be deleted entirely if both parties agree. Typical cost provisions include:
- Rental fee: In Georgia, the typical commercial lease rental fee is expressed not in dollars per month, but in dollars per square foot. To translate this figure into a monthly rental fee, multiply it by the total number of square feet and divide the result by 12.
- Common area charges: If the rental space is part of a complex (such as a shopping mall or an office building), the tenant will be usually be assessed a monthly common area maintenance charge (for security, for example, or maintenance of public restrooms).
- Pass-through charges: The landlord of a commercial lease will often pass on some of his ownership expenses, such as property taxes and utilities, to the tenant. Although the tenant is entitled to refuse such a demand, the landlord’s remedy is to simply refuse to sign a lease that does not include a pass-through provision.
- Percentage Rent: Some commercial leases allow the landlord to effectively own a piece of the business by charging the tenant a variable monthly fee based on a percentage of the tenant’s monthly sales. A percentage rent clause will grant the landlord limited access to the tenant’s business records.
- Personal guarantees: Commercial landlords frequently require a representative of a business entity, such as a corporation or limited liability company, to personally guarantee the payment of the lease amounts. This means that the representative’s personal assets can be seized if the company breaks the lease.
The duration of a typical commercial lease is three years, with an option to extend for another three years. A start-up might prefer a shorter lease term in case the business fails before the three-year term expires, while an established business might prefer a longer lease term. Since the rental fee for an extended lease term is likely to be greater than for the initial term, the parties can bargain for a shorter lease term in exchange for a higher extended term rental fee.
Maintenance and Repair
In a commercial lease, the landlord is likely to expect the tenant to take care of even major repairs to anything inside the building. The tenant will also be expected to comply with municipal regulations (the city fire code, for example). The tenant is also generally responsible for installing signage and redecorating or reconstructing the property with the landlord’s consent. A tenant may be able to convince a landlord to partially finance new construction if it will add to the long-term value of the property (installation of an elevator, for example).
Abandonment and Eviction
If the tenant abandons the lease without appropriate grounds, the landlord can file a lawsuit for claim damages equal to the remainder of monthly rental fees for the entire lease term. If the tenant defaults on the rental payment, the landlord cannot simply lock out the tenant. Eviction is a legal process that requires the landlord to send the tenant a written eviction notice that includes certain information, and file a civil action to physically evict the tenant. Failure to follow appropriate legal procedures can result in serious legal consequences.
Whether you are a landlord or a tenant, if you are considering entering into a commercial lease concerning property in the Atlanta metro area, the assistance of a skilled landlord-tenant attorney might turn out to be priceless. At Danowitz & Associates P.C., our Atlanta landlord-tenant attorneys are highly skilled in drafting leases and handling commercial landlord-tenant disputes. For a free evaluation of your case, call us today at 770-933-0960 or email us at firstname.lastname@example.org.
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