Business Law 101 / Default Provisions in Commercial Leases

By Albert L Kelley, Esq.

While all aspects of a commercial lease are important, probably the section to pay closest attention to is the default section.  While any violation of the lease can be deemed a breach, the default section tells you when a violation is deemed a breach of the lease and what the remedies for that breach are.  Most of the time these clauses are fairly standard, with a few modifications on timing. Unlike residential leases where the statutes are controlling, in commercial leases, the terms of the lease control (usually).

The most common breach is not paying the rent on time.   If rent is due on the first, it needs to be paid on the first.  Some lease will give a grace period; others will not. Most leases allow the landlord to give the tenant a written notice the day after the rent is due demanding the tenant to either pay the rent or leave the property.  Most of the time, the Tenant is given three days, but occasionally it is longer. During that period, if the tenant tries to pay the rent, the landlord must accept it. After the deadline, the landlord is entitled to evict the tenant.

Most leases state that if the tenant violates the lease in a way other than failing to paying rent, such as failing to make repairs, failing to pay utility bills, or subleasing the property, the Landlord must give the tenant a notice specifying what the violation is.  If it is a minor violation, the tenant should be given time to fix whatever the violation is. Usually this is a seven day period. However, if the violation is one that puts the property at risk or puts people in harm’s way (examples would include demolition work within the unit, harassment or acts of violence towards anyone, or unsafe working conditions), the landlord does not need to give the tenant an opportunity to fix the violation- they can just give them notice that they must leave.  This is usually a seven day notice. These notices are generally mandatory (although rare, I have seen lease that do not require advance notices and in commercial leases, there have been cases where the “no notice provision” was allowed).

Equally as important as the notice provision is the remedy provision.  What can the landlord do after the breach has been determined. Most leases have a combination of clauses.  Once the tenant has been evicted, the landlord can ask the court to order the tenant to pay rent each month as it comes due until the landlord finds a new tenant, or the Court can order the tenant to pay all the rent that would have been due under the lease if it had gone to its natural conclusion. In other words, if there is still three years left on the lease, the court can order the tenant to pay three years rent immediately.  The court can also simply give the landlord possession so he can re-rent the property or even use it for his own purposes. If the violation is something other than nonpayment of rent, the landlord can fix the violation and then charge the tenant for the cost. Many leases allow the landlord to simply come in and take over the property without court action. These clauses are not enforceable. Florida has a strict law that requires all evictions to be done through the Court.  This means self-help evictions are not allowed (Landlords are however able to retake possession when tenants have abandoned or surrendered the property).

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University.  He is also the author of “Basics of Business Law” “Basics of Florida’s Small Claims Court” and “Basics of Florida’s Landlord-Tenant Law” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice.  If you have any questions about legal issues, you should confer with a licensed Florida attorney.

[livemarket market_name="KONK Life LiveMarket" limit=3 category=“” show_signup=0 show_more=0]