If you own a business and you operate out of a physical location, you will likely need to sign a commercial lease. In Texas, there are only limited regulations in place that protect commercial tenants. Instead, the lease itself provides the primary legal protection for business owners. Our Houston real estate lawyer knows the key clauses that every business owner should watch for in a commercial lease in Texas.
A Premises Clause
As a general rule, a commercial lease in Texas should contain a premises clause. That is to say that the lease should specify the property that is actually being rented (and is available for commercial use) for the tenant. That may sound simple, but it can become a serious problem if the lease is unclear about storage areas, patios, parking rights, signage areas, loading zones, common areas, utility rooms, roof access, or shared corridors. A business owner should confirm that the legal description, suite number, square footage, floor plan, and permitted access points match the actual business needs.
Term, Renewal, and Commencement Clause
A commercial lease in Texas should also clearly state when the term begins, when rent starts, and when the lease ends. These dates are not always the same. For example, a tenant may get early access for buildout before the rent commencement date. Renewal options should also be precise. The lease should state how and when the tenant must exercise the option, whether rent will be fixed or market-based, and whether the tenant loses the option after any default. It is crucial that there is no misunderstanding between the landlord and the tenant (business owner) on these issues.
Rent and Additional Rent Clause
Commercial rent is rarely limited to base rent. A Texas commercial lease may also require payment of taxes, insurance, common area maintenance charges, utilities, management fees, repair costs, trash removal, HVAC maintenance, security, and other expenses. The lease should define what counts as “additional rent.” In other words, your commercial lease should be very clear as to how much you owe in rent. Do not assume that it is straightforward. The amount of rent due under the terms of a commercial lease can be much more complicated than with a residential lease.
Operating Expenses and CAM Clause
Common area maintenance charges (CAM charges) can become one of the most expensive parts of a commercial lease. The clause should explain what expenses are included, what expenses are excluded, how the tenant’s share is calculated, and whether there is any cap on controllable operating expenses. A tenant should watch for capital improvements, administrative markups, reserves, landlord overhead, affiliate charges, legal fees, and expenses that benefit other tenants more than the tenant’s business. A strong lease gives the tenant the right to review backup documentation and challenge improper charges within a defined period.
Use Clause and Exclusive Use Clause
The use clause controls what the tenant may do in the space. A narrow use clause can create problems if the business expands, adds services, changes product lines, or pivots its operations. A restaurant, salon, medical office, gym, daycare, retailer, or professional practice should make sure the permitted use matches the actual business plan. In retail centers, an exclusive use clause may also be critical. For example, you may want to have some form of protection in place to ensure that a commercial landlord cannot rent an adjacent property to a direct competitor.
Repairs, Maintenance, and Buildout Clause
A lease should allocate responsibility for repairs and maintenance. The tenant may be responsible for interior repairs, fixtures, equipment, plumbing serving the premises, HVAC service, plate glass, doors, and janitorial work. The landlord may retain responsibility for structural components, roof, foundation, exterior walls, parking lots, and building systems.
Assignment and Sublease Clause
A business owner should pay close attention to transfer rights. An assignment transfers the tenant’s leasehold interest to another party. A sublease allows another party to occupy all or part of the premises under the tenant. Many commercial leases prohibit assignment or subleasing without landlord consent. The clause should state whether consent may be unreasonably withheld, whether transfers to affiliates are permitted, and whether a sale of the business or a change in ownership counts as an assignment.
Default, Lockout, and Remedies Clause
Default provisions are among the most important clauses in a Texas commercial lease. The lease should identify what counts as default, what notice is required, whether the tenant has a cure period, and what remedies the landlord may pursue. Texas law gives commercial landlords certain statutory tools, including lockout rights for delinquent rent if the statutory requirements are followed. Texas Property Code § 93.002 governs commercial lockouts.
Landlord Lien and Personal Property Clause
Texas law gives commercial landlords a statutory lien on certain tenant property for unpaid rent under Texas Property Code § 54.021. That means inventory, equipment, furniture, or other personal property located at the premises may become part of a rent collection dispute if the tenant falls behind. For business owners, this clause deserves careful review. The lease may expand, waive, subordinate, or contract around certain lien-related rights. It is crucial that you understand exactly what is required by your lease agreement.
We Help Business Owners in Texas Navigate Commercial Leasing
In Texas, a commercial lease is a critically important document. Every business owner needs to know the key provisions to watch out for. A properly drafted commercial lease should protect your rights and your interests. At SimpleLawTX, we are committed to doing right by our clients. Your initial consultation with our Houston commercial lease attorney is strictly confidential.
Contact Our Houston, TX Commercial Lease Agreement Lawyer Today
At SimpleLawTX, our Houston real estate lawyer has the knowledge, skills, and experience to help business owners navigate commercial leases. If you have any questions about an important clause in a commercial lease agreement, we can help. Contact us today to set up a completely confidential, no obligation initial consultation. Our firm handles commercial real estate matters for business owners in Houston, Harris County, and throughout Southeast Texas.
