A business that leases real estate and improvements (buildings, etc.) in the form of space for offices, a warehouse, a restaurant, a nail or hair salon, a clothing store, a coffee shop, or other commercial (nonresidential) space will usually be required to sign a written contract known as a commercial lease agreement.
The tenant (the business occupying the space) who signs a commercial lease agreement is generally expected to be a more savvy, sophisticated, and informed tenant (also known as a lessee) than a tenant in a residential lease, and the law usually does not provide a commercial tenant with the same protections as residential tenant receives.
Because the law does not provide a commercial tenant with many protections, it is up to the commercial tenant to read, understand, and negotiate protections in a proposed lease agreement before signing it, as most every paragraph in a commercial lease agreement can have a significant impact on a business’s operations and financial stability.
A commercial landlord’s responsibilities are generally determined by the specific language in the written lease agreement and the state's contract law.
Contract law in most states recognizes an implied duty of good faith and fair dealing between parties to a contract, and a landlord who does not perform its responsibilities under a commercial lease in good faith or who is not fair in its dealings with the tenant may be in breach of the landlord’s implied duty of good faith and fair dealing.
In Washington State, businesses entering into commercial lease agreements for various types of nonresidential spaces are expected to engage in these contracts with a higher level of sophistication than residential tenants. Unlike residential leases, commercial leases offer fewer statutory protections to tenants, placing greater importance on the tenant's responsibility to thoroughly review, understand, and negotiate the terms of the lease. The terms of a commercial lease can significantly affect a business's operations and financial health. The obligations of a commercial landlord in Washington are primarily dictated by the explicit language of the lease agreement, supplemented by the state's contract law. Washington contract law includes an implied covenant of good faith and fair dealing, which requires both parties to act honestly and fairly in the performance and enforcement of the contract. A landlord failing to adhere to this duty may be considered in breach of the contract. It is advisable for tenants to consult with an attorney to ensure their interests are adequately protected in a commercial lease agreement.