Arizona Commercial Tenant Laws: How Do They Affect Your Business?

Opening a brick-and-mortar business in Arizona is exciting and full of opportunities. However, unless you have secured significant funding, you will likely rent the space in which your business operates. Renting provides the opportunity to test the success of the business without the long-term commitment of a mortgage, but it can be challenging to navigate the Arizona commercial real estate laws related to tenancy.

In short, the relationship between an Arizona commercial landlord and tenant is governed by the lease agreement and Arizona law.  Here are a few things to keep in mind with respect to commercial leases.

Look to See if the Lease Allows the Tenant to Sublease

Unless otherwise prohibited by your lease agreement, your business may sublease your rented property pending any relevant requirements. Most leases require landlord approval before a sublease can occur. Commercial landlords typically would rather have the space occupied than vacant, so most sublease scenarios do not result in legal issues. However, it is wise to review your lease agreement with an experienced real estate attorney before signing any sublease documents.

Certain Lease Provisions Let You Terminate Early

There are many reasons why a commercial tenant would want to terminate the lease agreement before its expiration. Perhaps the tenant business is not performing as well as anticipated, or perhaps the tenant believes the landlord has been negligent in upholding their duties.

This year, the coronavirus pandemic has significantly reduced or altogether halted the operation of many businesses, leading to issues between commercial landlords and tenants. It does not always matter why you wish to terminate your lease before it expires, as long as the lease includes an early termination clause. Also called a “break clause,” these provisions allow for an early exit without owing back pay for the remainder of the lease. Also, a commercial landlord has a duty to mitigate its damages, meaning that if a tenant vacates prematurely the landlord must engage in reasonable efforts to find a replacement tenant at fair market value.

Failure to Pay Rent Results in Loss of Property

Unless the lease prohibits such conduct, commercial landlords in Arizona may reenter and repossess the premises if the tenant has failed to pay rent or otherwise violated the terms of the lease agreement. If the tenant refuses to pay rent, A.R.S. 33-361 states the landlord may seize personal property from the premises in the amount of past due rent. This means your commercial landlord can enter your business and take items (aside from those exempt by law) to cover the missed payment(s).

Find an Experienced Commercial Real Estate Attorney in Arizona

MacQueen & Gottlieb have significant experience with commercial real estate law in Arizona. Our attorneys can help you review a potential commercial real estate purchase, draft and review all commercial real estate contracts, assist in the negotiation of lease agreements, resolve lease disputes, and pursue legal action when necessary.  Contact us today at 602-726-2229 to schedule an initial consultation or make an appointment online.