Legal Advice During Challenging Times

Who pays for maintenance on a commercial property?

On Behalf of | May 20, 2024 | Real Estate Law |

When someone rents or leases a commercial space, there may be concerns over who has to cover specific costs. Certainly, the tenant has to pay the monthly rent. But what about additional costs that come along with using the commercial location?

For example, wear and tear is likely, especially if the location gets a lot of foot traffic. Additionally, some systems – like the HVAC system – are just going to break down over time. So who is responsible for doing maintenance and upkeep? Does the business owner have to pay because their company is using the space, or does the landlord have to pay because they technically own the property – and will continue owning it even if the commercial tenant moves out?

How is the lease structured?

With a typical gross lease, the tenant only has to cover the cost of rent. So it is possible that maintenance would be the responsibility of the property owner. 

But it really depends on the type of lease. A modified gross lease, for example, shifts the burden of both utilities and maintenance of individual units to the tenant. Maintenance and upkeep on common areas is still performed and paid for by the landlord.

On top of that, there are many more options besides a gross or modified gross lease. For example, a single-net lease means that the tenant pays for rent, utilities and property taxes. A triple-net lease, on the other hand, adds in property insurance and maintenance of common areas.

In other words, every situation is different, and it’s very important for both business owners and landlords to understand what responsibilities they have. While drafting contracts or working through a dispute, both parties must understand their legal options.