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Do you know your rights as a business tenant?

by | Jul 23, 2021 | Buying A Franchise, Real Estate

You found an ideal physical location for your franchise business. As a first-time business owner, you must understand the differences between residential tenant rights and business tenant rights. It’s important to know when you must handle a situation alone and when to hand things over to the property owner.

Taxes

Looking over your lease, do you see anything about tenant responsibilities for franchise, state or federal income, or any other taxes? If so, speak with the landlord about specific taxes you must take care of. If you notice sections in the agreement that makes you obligated to pay future taxes, you may ask to remove them from the lease.

Habitability of premises

Unlike a residential real estate lease, your commercial property landlord does not have an obligation to address maintenance issues such as an HVAC system that does not work or a lack of hot water. If such inconveniences happen, you cannot withhold the price of repairs from your rent payments. That said, business property landlords bear responsibility for structural repairs.

Trade improvements

Depending on your industry, you may need to make improvements to your commercial space to conduct business, such as adding display shelves or changing rooms. Your landlord owns all improvements you make to the space, except for trade fixtures. Any trade fixtures added to the property remain yours, and you may take them with you if you move out when your lease expires. Your lease should specify trade fixtures you purchase and install and note that you may remove them when you move out.

Do not hesitate to ask for changes to your commercial lease if you feel your landlord has too much power. The agreement should benefit all parties involved.