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Feb 23, 2018

Terminating a Commercial Lease

*** This Blog Post Applies to Commercial Lease Agreements ***

Most commercial lease agreements have what is called a "holdover provision". The holdover provision details what will happen when the original lease ends and a formal extension is not filed. The holdover provision will say something like, "either the tenant or the landlord can terminate the lease with a 60-day notice".

However, in the event that the commercial lease is silent on how to terminate the lease once it has become month to month then A.R.S. § 33-341(B) which states in part: "A lease from month to month may be terminated by the landlord giving at least ten days notice thereof."

I find this amazing that a landlord can terminate a commercial lease by only giving the tenant ten days to vacate! What if you have a large warehouse full of supplies? What if you have a thriving medical practice? Without a pre-negotiated terms you may be subject to a ten day notice to vacate! A.R.S. § 33-1375(B) of the Arizona Residential Landlord - Tenant Act requires landlords to give their tenants at least 30 days to vacate. It's amazing that businesses are given even less time to pack up their stuff and leave!

What Should Commercial Tenants Do?

If you are negotiating a commercial lease agreement you need to specifically negotiate a "holdover provision". This provision should detail exactly how a lease will terminate. Depending on your type of business you may want to require a 90 day notice from the landlord.

Commercial lease agreements are usually for many years and involve hundreds of thousands of dollars in rent so before signing on the dotted-line make sure you have negotiated the terms that will protect your needs.

If you would like assistance from a commercial real estate attorney call us at 480-344-4035 or email me at cdunaway@davismiles.com.