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Commercial Real Estate Investing

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Jack Deer
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Late fees on Commercial lease.

Jack Deer
Posted Feb 1 2023, 13:26

TEXAS.

I saw this on another website: "Commercial leases are basically no holds barred. The consumer protections for residential leases do not extend to commercial leases because the law presumes that the
parties are of equal bargaining power and sophistication. The amount
would have to be extremely egregious.
"

Is this true?

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Bob Solak
  • Investor
  • N.E. Illinois
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Bob Solak
  • Investor
  • N.E. Illinois
Replied Feb 1 2023, 14:54

There are still laws governing commercial leases (and I assume you are not referring to multi-family or any type of housing), and these vary from State to State (and possibly even locally).  But it is certainly true that there are less tenant protections and  easier eviction processes for obvious reasons.   Commercial landlords aren't generally throwing grandmas out on the street.   

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Jack Deer
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Jack Deer
Replied Feb 1 2023, 15:24
Quote from @Bob Solak:

Commercial landlords aren't generally throwing grandmas out on the street.   

The Tenant in this scenario is a National company, with interest, offices, and assets across the continent.
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Dave Finigan
  • Commercial Real Estate Broker
  • Saint Paul, MN
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Dave Finigan
  • Commercial Real Estate Broker
  • Saint Paul, MN
Replied Feb 1 2023, 15:29

Generally, it's true. Wolf v wolf as opposed to wolf v sheep. I'm sure many states have some definition of egregious, but yeah, terms are negotiated up front without any consumer protection oversight.

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Richard F.#1 Tenant Screening Contributor
  • Property Manager
  • Honolulu, HI
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Richard F.#1 Tenant Screening Contributor
  • Property Manager
  • Honolulu, HI
Replied Feb 1 2023, 15:39
Quote from @Jack Deer:

TEXAS.

I saw this on another website: "Commercial leases are basically no holds barred. The consumer protections for residential leases do not extend to commercial leases because the law presumes that the
parties are of equal bargaining power and sophistication. The amount
would have to be extremely egregious.
"

Is this true?


Aloha,

In general, yes. Commercial implies Business tenants, vs. Residential tenants. Residential agreements typically fall under each jurisdictions Landlord / Tenant laws. Commercial, which includes storage, parking, warehousing, manufacturing, retail businesses of all kinds, is in large part based on simple Contract Law, along with other State and Federal regulations, such as usury laws, fraud, etc. etc. Bottom line, courts generally believe each party knows their business, and is utilizing appropriate consultants to guide them. As always, check local laws, but often all that is needed to keep a commercial tenant out if they are in breach of contract is a chain and a padlock.

Here is a great source to view sample Industry Standard Commercial documents:
https://www.aircre.com/air-cre...

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Jack Deer
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Jack Deer
Replied Feb 1 2023, 16:12
Quote from @Richard F.:
Commercial, which includes storage, parking, warehousing, manufacturing, retail businesses of all kinds
Yes. The lease is for vacant land.

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Ronald Rohde
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#3 Commercial Real Estate Investing Contributor
  • Attorney
  • Dallas, TX
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Ronald Rohde
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#3 Commercial Real Estate Investing Contributor
  • Attorney
  • Dallas, TX
Replied Feb 2 2023, 07:47

Yes, with some exceptions for usury or DTPA violations.