Business Law 101 / LEASES

By Albert L. Kelley, Esq.

For many businesses, the lease is one of the most important legal documents they will sign and has the greatest impact on the success or failure of the business. A lease is a contract between a property owner, referred to as the Landlord or the Lessor, and the business or person wanting to occupy the property, called the Tenant or Lessee. A properly drafted lease does more than say how long a tenant can stay in the property and how much rent must be paid. It defines what rights the landlord and tenant have.

Why is this document so important? Real property leases are generally divided into residential, commercial and self-storage. The rules for each differ. Usually, commercial leases are more detailed as the statutes give less guidance for commercial leases. The legislature deems that businessmen are able to negotiate the terms sufficiently. While residential lease statutes cover terms such as maintenance, commercial lease statutes are generally silent on terms. As such, negotiation of a lease can be crucial for the success of a business. A lease can assist the success of a business by providing for continuity, or it can destroy a growing business if the term is too short. It might save the Tenant from maintenance, or it might drown the business in massive repair bills.

A lease can be written or verbal. A written lease must be signed by the parties and two witnesses or it is unenforceable and will be deemed a verbal lease. An unwritten lease is considered a lease at will. In other words, it can be terminated at any time by either the landlord or tenant with proper notice. The term of the lease is based solely on when rent is paid. If the rent is paid on a weekly basis, the lease runs from week to week; if the rent is paid monthly, the lease runs from month to month. The lease can also be quarterly or annual. These terms are important because they determine how quickly a landlord can end a tenancy. If a lease is weekly, the landlord needs only give the tenant one weeks’ notice that the lease is ending. If monthly, the notice extends to 15 days from the date the next rent payment is due (Many landlords misunderstand this statute and believe the 15-day notice can be given at any time. The law is clear that the notice must be delivered at least 15 days from when the next rent payment is due). The tenant is bound by the same notice requirement.  For a quarterly lease, the notice must be given at least 45 days before the end of the rental period and three months for an annual lease. The notice MUST be written or it is invalid.

Maintenance must be agreed to by the tenant and landlord as part of the lease. Many tenants mistakenly believe that they can withhold rent if the landlord does not repair the property. Only if there is an affirmative and express agreement that the landlord will maintain the premises can the tenant withhold rent for the landlord’s failure to maintain the property, and then only if the lack of repairs have made the premises wholly untenantable. If the repairs are just an inconvenience, the tenant must still pay rent. To withhold rent, the tenant must give the landlord notice declaring the property wholly untenantable (this means that the property is unfit for occupancy) and demanding that specific repairs be completed. The tenant must give the landlord at least 20 days to effectuate the repairs. At that time, the tenant may start withholding rent, however, once the landlord repairs the premises, the tenant must turn over all rent withheld to the landlord.

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” and “Basics of Florida’s Small Claims Court” (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.

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