What are my rights as a tenant of a commercial lease agreement?

Additional Information: I’ve recently exited a commercial lease in Brookline in good standing, however, the landlord has sent a letter indicating there are deficiency repairs that I deem unreasonable in the amount of about $10,000.00 for a one year lease with monthly rent of $2,300.00. I find that unreasonable and would like to know what consequences I would face if I decide not to comply. Would I need to hire an attorney to represent me?

Answer:

You are smart to evaluate your legal rights in light of the landlord’s request for money after the expiration of the lease term.

The first thing to evaluate is whether a signed written lease was in place for the property, and whether you provided the landlord with a security deposit at the time the lease was signed.  Most commercial landlords require a security deposit of 2-3 month’s rent at the beginning of the lease. You did not indicate whether or not the landlord is holding a security deposit, and, if so, the amount of money being held in escrow.   

Assuming there is such a security deposit, you will need to affirmatively request in writing that the funds be returned to you since it appears the landlord does not have plans to do so.  You should review the terms of your lease regarding return of the security deposit in order to evaluate whether the landlord has any rights under the lease to keep the money.  The amount the landlord is seeking represents over four months of  rent, or a quarter of the total owed under the lease, and appears excessive assuming you did not cause significant damage to occur during your tenancy. A tenant is not responsible for ordinary wear and tear to the apartment, or updates such as replacing the carpet or painting the walls, but would be responsible for significant damage done to the property, such as broken fixtures or holes in the walls or ceilings. Assuming you did not cause major damage to the property during your leasehold, it would be wise for you to hire an attorney to send a demand letter to the landlord and, if necessary, file a lawsuit seeking the release of the disputed monies.  In Massachusetts, there are no statutes offering protections for commercial tenants.  Commercial leases are governed by general contract principles, and, therefore, disputes such as this one would be governed by contract law.  Any lawsuit for a breach of contract would need to be filed within 6 years to meet statute of limitation requirements.

If you had been a party to a residential lease, you would have statutory protections. M.G.L. c. 186 Sec. 15B (i.e. the Massachusetts Security Deposit Statute) provides four primary obligations for landlords holding security deposits: (1) the landlord must provide the tenant with a receipt for the security deposit, (2) the landlord must hold the funds in a separate interest bearing account; (3) the landlord must provide the tenant with a statement of condition; and (4) the landlord must maintain records of deposits and repairs.  The statute also requires landlords within thirty days after the termination of occupancy to return to the tenant the security deposit or any balance thereof; provided, however, that the landlord may deduct from the security deposit any unpaid rent, real estate taxes, or a reasonable amount to repair any damage to the premises. If the landlord failed to comply, he would be liable for three times the amount he should have returned to the tenant, plus interest, costs and reasonable attorney’s fees.  A landlord who fails to comply with these provisions forfeits the right to continue to hold the deposit and in certain circumstances loses his right to counterclaim for damage to the premises in any suit brought by the tenant to recover the security. However, M.G.L. c. 186 Sec. 15(b) only applies to residential tenants and not commercial tenants.  There is no corresponding statutory requirement for landlords of commercial property.

If the landlord is not currently holding money from your security deposit and is claiming that you owe him $10,000.00 in damages, you should expect the landlord to file a lawsuit against you shortly.  You should hire a lawyer to review the demand letter and review the terms of your lease, and evaluate your legal rights.  Even though the lease has ended, it is not a good idea to simply ignore the letter because there may be additional terms or consequences that you do not understand.   For example, there may be a clause in your lease requiring payment of landlord’s legal fees in any post-lease disputes.  Your lawyer will be able to draft a response to the landlord, stating why you do not believe the request for additional funds is meritorious, explaining in detail why the repairs the landlord thinks should be made are not necessary and/or your responsibility, and stating the fact that the lease is over and you are no longer a party to its terms and conditions.  Your lawyer should also request a written itemized list of damages, including estimated repair costs of said damages, and proof that the damages occurred during your leasehold and not after you left.  It would then be the landlord’s decision whether to drop the matter entirely, respond back to you in writing, or initiate legal action for breach of contract.  A strong written response to a demand letter is often a deterrent against further legal action because the landlord will know you are represented to counsel and not simply going to pay the money he requests at his whim, and without significant time and expenses on his part.

To avoid issues like this in the future, it is a good idea to meet with your landlord at the end of your lease term and review the condition of your property together. If there are no areas of concern, you should request that your landlord sign a statement that the property is being exited in good condition with only normal wear and tear. This way you will be protected from any allegations of property damage that occurs after the lease has ended.