Legally, commercial leases differ from residential leases in that there are fewer consumer protection laws in commercial leases. For example, there are no caps on security deposits or rules for protecting tenant’s privacy. Additionally, many commercial leases are customized specifically to the landlord’s needs, unlike residential leases, that are usually similar. Further, commercial leases tend to be long-term and binding. A tenant cannot break or change a commercial lease as easily as a residential lease. However, commercial leases are generally more negotiable and flexible. Therefore, it is important for the potential tenant to carefully understand the specific terms before entering a commercial lease.
Some critical lease terms that are important to consider in a commercial lease are: the length of the lease, rent, insurance, property taxes, security deposit, dimensions of the space being rented, possible improvements, fixtures or signs, maintenance, assignments or subleasing, renewal or termination of the lease, and how disputes will be handled. Ensuring all these provisions are acceptable and understood by the potential tenant is pertinent to the overall successfulness of the lease for both the tenant and landlord.
Kentucky law does not allow much leeway for commercial tenants to break a lease. However, it does require landlords to give at least 30 days notice to tenants if he or she plans to raise rent and seven days for the tenant to vacate the premises. State law allows a tenant to break a lease if the tenant is starting active military duty, the rental unit becomes unsafe or violates Kentucky health or safety codes, or the landlord harasses the tenant. However, even if a tenant does not have legal justification to break the lease, which is likely in a commercial lease, Kentucky law requires the landlord to make reasonable efforts to mitigate damages. If a new tenant is found, the previous tenant is only required to pay the amount of rent the landlord loses while the space is vacant. These loses can include, costs of advertising the property and lost rent from the vacancy. However, if the landlord is unable to find a new tenant, the tenant on the lease is wholly responsible for the remainder of the lease term.
Do not execute a lease prior to the review of the lease by a professional. Whether you are the landlord or tenant, we stand ready to review your lease and ensure you understand it.