Most of us at some point in our life has rented an apartment or house. From that experience we may think have a vague understanding of landlord-tenant law. As a result, when entering a commercial lease for a business we often do not pay close attention to rental agreement.
The problem is, commercial leases are very different from residential leases in Ohio. First, the Ohio Landlord Tenant Act found in Chapter 5321 of the Ohio Revised Code does not apply to commercial leases. Commercial tenants do not benefit from all of the protections that the Act gives to residential tenants.
Second, commercial leases often make both the company and at least one company principal liable on the lease. Sometimes the lease defines the “tenant” as both the company and the principal. Other times, the lease requires the principal to sign as a guarantor. In either case, the benefits of the corporate shield may be lost if the tenant has not carefully reviewed the lease and required the lease to hold only the company liable in the event of breach.
Finally, most commercial leases are very landlord-friendly; more so than in most residential leases. In some instances, the lease allows the commercial landlord can use self-help to reclaim the property. This means that the landlord can take possession and change the locks without first going to court. Along the same lines, in many commercial leases the landlord can improve the property and the common areas at the expense of the tenants. This may be true even though the tenant does not want or like the improvements, or worse yet, can not afford the cost of the improvements.
No one likes reading commercial leases. Leases are usually dry, wordy, and filled with legalese. However, signing a commercial lease that has not been thoroughly reviewed is a bad business decision.