A Commercial Renter’s Rights in Georgia (Credit: Kristy Borowik, bizfluent)

Residential tenants have more rights than commercial renters in Georgia. Unfortunately the landlord has more rights when it comes to commercial property lease agreements. The key to understanding any tenant’s rights is in the lease agreement, which Georgia recognizes as a legally binding contract. Unless something in the lease is illegal, any tenant’s rights are limited by the language in the lease agreement, so it is crucial for all tenants to understand their lease agreements before signing.

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Before Signing the Lease

The potential commercial tenant has the right to request a subordination, non-disturbance and attornment agreement, which requires a lender to honor a tenant’s lease in the event of foreclosure on the leased property. If the landlord’s lender does not want to sign an SNDA agreement, the tenant might want to find another property to lease.

All potential tenants should inspect the property before leasing and have a lawyer look over the lease agreement before signing.

Privacy Rights

Residential tenants have the right to privacy in the rental property. The landlord must give ample notice before entering the property and enter only at a reasonable time and for a legitimate reason. The same is not true with commercial property. Landlords may enter a commercial property whenever they want, as long as they do not interfere with the commercial tenant’s business.

Insurance

Georgia requires the landlord of a commercial property to insure the property against fire and other basic risks. The commercial tenant has the right to request proof of insurance before paying rent. However, the tenant is responsible for liability insurance.

Unpaid Rent

The landlord may lock out a commercial tenant for not paying rent. This is different with residential tenants, as the landlord may need a court order before locking them out. Commercial tenants do not have the right to the leased property as they would residential property. Further, a landlord may sell the commercial tenant’s property to cover back rent.

Disputes

Georgia does not have a governmental agency that settles dispute between landlords and tenants or that has the power to force either party to behave in a particular manner. If commercial tenants cannot resolve a dispute with a landlord on their own, they must use the courts, either directly or through a lawyer, to enforce their legal rights.

If you have questions regarding commercial landlord/tenant law, let us help!  Thrift & McLemore’s attorneys have assisted numerous companies and individuals in the legal field.   Contact Thrift & McLemore by email at [email protected] or by phone at 678-784-4150 to discuss how we can help you.

Is a Shift to Commercial Real Estate on the Horizon?

A snapshot of the downtown Atlanta skyline reveals a construction boom, flourishing with cranes and even more new high rises.  This is only logical, as the ten year rebound in the real estate market has sharply increased the demand for top end real estate.  According to Collier’s International, commercial vacancies in 2017 were the lowest they’ve been since the recession.  It would seem that these buildings can’t go up fast enough.

The consequence to this seemingly unending demand for commercial space is the equally aggressive prices of rent.  As commercial construction projects typically lag the economic recovery, this pent up demand creates ascendant price fluctuations until new office buildings can come online to alleviate demand.  Indeed, Colliers reports that average rent prices increased by 7% alone last year.  Class A luxury commercial real estate increased 17%.

While it is encouraging to see so much new commercial construction around the city, Colliers again accounts that the majority is in high end markets, signaling that rental prices will only continue to rise.  In a booming market, this can be seen as healthy, but as with residential, every market has its limits.

Douglas Sams, Commercial Real Estate Editor for the Atlanta Business chronicle reported yesterday that while commercial rental activity remains high, consolidations are beginning to take hold which could slow the market.  Mr. Sams breaks that AT&T, with offices in downtown and midtown, expect to vacate three buildings in Atlanta, moving operations into existing offices in an effort to save on outsized rental costs.  Consolidation of such a large Atlanta business brings pause.

Ken Ashley, Executive Director and Cushman and Wakefield, cites shifts in the traditional commercial real estate paradigm as a way that companies are coping with outsized rents.  “City Center” projects outside the perimeter are gaining steam, with projects like The Battery in Smyrna, or Avalon in Alpharetta.  Ashley states this is a good way to maintain urban environments, while taking advantage of more plentiful and affordable land.  Still he says upward price pressure will begin to take its toll, positing that subleases of space will accelerate as the needs of companies are no longer adequately met or are overburdened by the cost of the real estate.

While there are no indications on a hard stall with regards to the Commercial Real Estate market, as the ever increasing price tag for quality office space continues to rise, more and more individuals find them financially stressed and in some cases over leveraged.  For companies facing this situation, it is important to understand their options.

As this unprecedented market boom nears its cyclical end, commercial foreclosures occurrences undoubtedly will find themselves back on the rise.  After so many years of strong growth, some market stagnation is surely expected, and has already been seen on the residential side.  Whether you are a commercial landlord or a commercial tenant, in order to protect your interests you should at the very least have a functioning knowledge of commercial foreclosure.

Commercial foreclosure operates similarly to residential foreclosure in Georgia.  Georgia law allows non-judicial foreclosure is legal meaning that when the borrower defaults on the mortgage, either by falling behind on payments or failing to abide by the terms of the agreement, the lender can accelerate the loan and commence foreclosure without the intervention of the court.  This can speed up the process of foreclosure and catch many affected off guard.  The need for awareness applies not only to owners of commercial real estate, but tenants’ rights are also affected.

Before allowing your organization to find itself on the wrong end of these proceedings, you absolutely must speak with competent counsel who can educate you with regard to your options.  Thrift & McLemore’s attorneys have made a career in the commercial real estate arena and can help with your exact situation.   Contact Thrift & McLemore by email at [email protected] or by phone at 678-671-4031 to discuss how we can assist you with protecting your rights and keeping your commercial property or rental out of foreclosure today.

Thrift & McLemore, LLC announces the completion of commercial leases.

Atlanta (5.18.17) – Thrift & McLemore, LLC announces the completion of all negotiated commercial leases for new a 175-acre mixed-use development, with anchor tenants such as Whole Foods Market and iPic Theaters. For more information concerning Thrift & McLemore’s commercial leasing practice, please contact Ryan McLemore at 678.671.4031 or [email protected].

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