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Commercial Leasing

A lease is a contract between the landlord and tenant that gives the tenant the right to possession of the landlord’s property under certain terms and conditions. The lease may be verbal, particularly if it is for a short period of time; however the law requires a written lease if the tenancy is for a year or more. Whether required or not, a written lease is always best. If the lease is written, you should never sign it before you have read and understood its contents. Do not sign a lease that is blank or has any blank spaces. The lease, once signed, is the contract between the landlord and the tenant. Verbal promises should not be relied on. You should obtain a fully completed and signed copy of the written lease.

In circumstances where the law requires a written lease, it usually requires that certain provisions be included in the lease, in addition to the address of the property being rented. The lease should at least contain the following information:

  • name and address of the landlord
  • name and address of the tenant
  • length of the lease
  • the amount of the rent
  • names of the persons who may occupy the unit
  • the amount and nature of deposits and conditions for the return of deposits
  • the dates that rent is due
  • the responsibilities of the landlord and tenant for maintenance and utilities
  • conditions that will permit the landlord or tenant to terminate the lease before the end of the lease term

Sometimes federal law as well as state and local law may require additional provisions to appear in a lease. If you have questions about a lease, consult an attorney.

Payment of Rent

The tenant pays rent for the possession of the rented property. Leases usually require that the rent be due on a certain date. Sometimes, leases contain provisions for grace periods during which the landlord may elect to waive late charges. However, grace periods usually do not extend the time for payment of the rent. When the tenant fails to pay the rent, the landlord may take legal steps to collect the rent or to remove the tenant for nonpayment.

There are very few times when a tenant may withhold rent because the landlord has not performed an obligation of the lease. However, the tenant may be entitled to withhold rent where dangerous defects exist because the landlord has failed to perform an obligation under the lease, which constitutes a danger to the life, health or safety of an occupant.

Additionally, the landlord should receive written notice of the defect by certified mail and have a reasonable opportunity to repair a defect after receiving notice from the tenant. The landlord may be given notice of housing code violations from the county or city housing department which would entitle the tenant to withhold rent for conditions dangerous to the health, life or safety of an occupant.

Security Deposits

The law permits the landlord to collect a security deposit. This deposit usually may not exceed two times the monthly rent. In federally subsidized housing, the security deposit usually may not exceed $50. It protects the landlord from damage to the leased unit caused by the tenant or rent owed by the tenant.

The landlord is not required to use the security deposit for rent while the tenant still occupies the property, nor is the tenant responsible for damage to the property due to ordinary wear and tear.

When the tenant first moves into the rental unit, the tenant should make a list of damages that exist at that time in writing and send a copy to the landlord. When the tenant moves out, the landlord will inspect the property to determine whether any damage was incurred during the lease. The tenant may be present at the inspection if they advise the landlord by certified mail that he or she is going to move, the date of the move and the new address. The tenant’s notice must be mailed at least 15 days before the moving date. The landlord must notify the tenant by certified mail of the time and date that the rental unit is inspected. This date must be within 5 days before or after the moving date of the tenant.

Within 30 days after the tenant moves, the landlord must advise the tenant in writing about any damages that are being deducted from the security deposit. The landlord must return the security deposit, less damages, within 45 days. If a landlord fails to return a security deposit as required by law, the tenant may recover up to three times the amount of the security deposit wrongfully withheld, plus attorney fees, by filing an action in court.

This does not apply where a tenant has abandoned or was evicted from the premises. Special requirements must be met in such cases.

Maintenance of the Property

Unless required by the lease or by state or local law, the landlord is not responsible for maintaining the property, other than to insure that dangerous conditions do not exist on the property. Local law frequently requires that the property is habitable and that a unit meets certain minimal standards before it can be rented.

If something in the rental unit needs repaired, then the landlord is required to repair it, however the tenant must notify the landlord about the problem in writing.

If the tenant’s property is damaged by the landlord’s failure to make repairs required by the lease or law, the tenant may file a civil action for damages against the landlord. However, the landlord may not be liable for damage that is beyond his or her control. Tenants may purchase renter’s insurance to protect themselves and their property in this situation.

Termination of the Lease

Substantial Breach: The landlord may terminate a lease before its end if the tenant substantially breaches the lease. In order to do so, the landlord must send a notice to the tenant that states the tenant has breached the lease and indicates the landlord wants possession of the rental unit. If the tenant does not move out, the landlord may go to court ask the court and ask for eviction of the tenant. If the court determines that the breach by the tenant is substantial and warrants the tenant’s eviction, the court will issue an order evicting the tenant.

There are cases where the landlord’s actions allow the tenant to terminate the lease. Such a case is called a constructive eviction. A tenant should seek the advice of an attorney before attempting to terminate a lease because of the landlord’s actions, since the law in this area is complex.

Month-to-Month Tenancies: If a tenant is on a month-to-month lease, and is not federally subsidized, the tenancy may be terminated by either the landlord or the tenant after one month’s written notice (two months in Montgomery and Baltimore City). It is illegal for a landlord or tenant to terminate a lease for a retaliatory reason (for example the landlord terminates a lease because the tenant complains about the conditions of the leased property). However, it is not necessary for either the tenant or the landlord to give a reason for the notice under normal circumstances. Where the tenant is federally subsidized, the landlord may terminate the tenancy only if the landlord has a valid reason for terminating the tenancy.

Some critical negotiating areas that landlord tenant lawyers help in commercial lease terms include:

  • Lease default
  • Recapture
  • Restoration
  • Sub-lease
  • Buy-Out