Do you operate a business out of a rented commercial space?
Renting commercial property is an inexpensive alternative to owning your own brick and mortar. For some business owners, the benefits of lower upkeep costs, tax breaks, and flexibility can often outweigh the costs and obligations of property ownership ﹣ but there are drawbacks.
Those who lease commercial property can face the burden of landlords, property managers, and rigid or impeding tenancy agreements.
Despite these drawbacks, understanding your rights as a tenant can help you avoid problematic situations. What are your commercial property tenant rights in Pennsylvania? Read on to find out!
Lease Term & Evictions
By law, business owners have the right to operate their business for the duration of the lease.
Landlords cannot evict businesses from the property without just cause. Unpaid rent, repeated late rental payments, or violation of the lease’s terms and conditions, are examples of just cause.
In Pennsylvania, landlords can evict tenants as soon as a rental payment is late. Unless otherwise specified in the lease, rent is considered late the day after it is due.
Under Pennsylvania law, landlords can give a Notice to Quit to tenants who have not paid their rent. The tenant then has ten days from the date of service on the Notice to Quit to move out or pay their due rent.
If the lease is for one year or less and the landlord has just cause for eviction, they must give the tenant 15 days to leave the premises. For leases of one year or more, the landlord must give the tenant 30 days to move out.
Landlords can also issue a Notice to Quit when a lease has not been renewed and the tenant has been paying rent on a month-to-month basis.
Can Landlords Raise Rent?
Landlords cannot raise rent until the lease has ended, even if the property value has increased throughout the duration of the lease.
Rental escalations are often taken into consideration with long-term leases. If rental escalations have been specified in a lease and the tenant signs, they are agreeing to paying a higher, specified amount after the first year.
If the landlord and tenant wish to renew a lease, the new rental amount and any rental escalations must be specified in the agreement.
What If the Lease Outlives the Business?
If a company goes out of business while the lease is still in effect, they can get caught having to pay and finish out the lease. Some business owners choose to face eviction by stopping their rental payments; however, this can come with a slew of consequences, including money judgements and lawsuits.
Ideally, commercial property leases are long-term with durations of anywhere from three to five years. This gives businesses the ability to establish themselves in a particular location and prosper financially from the start. For landlords, this ensures continual rent payments.
But given the uncertainties of starting a new business, long-term commercial leases aren’t always viable. That’s why two-year commercial leases have become a prominent alternative for many leasing businesses.
Renters are entitled to privacy. As long as what you are doing is legal, landlords cannot interfere with your daily operations or prevent you from conducting your business how you please.
Only in emergency situations can a landlord enter the property without permission. Otherwise, landlords must provide notice with a reasonable amount of time for the tenant to grant permission.
Property Improvements & Maintenance
Landlords handle the general upkeep and maintenance of a property, and tenants are responsible for leaving the property as they found it. Leases will often detail what the landlord is responsible for handling, such as the electrical or plumbing systems.
Generally speaking, when tenants sign a commercial lease, they are agreeing that the property suits their needs and does not require additional improvements. Prospective tenants can request improvements as part of the lease. The landlord may be willing to pay for the improvements, but this is not always the case.
After the lease has been signed, tenants must receive permission from the landlord to make improvements. To avoid disputes, tenants should refrain from making improvements without their landlord’s permission.
Understanding Your Rights as a Commercial Property Tenant
Are you starting a business in Pennsylvania and plan to lease commercial property? Are you currently facing a commercial property dispute with a landlord or property management company?
The attorneys at Hoegen & Associates, P.C. are here to help. Contact us today to speak to one of our experienced real estate attorneys.