Commercial Real Estate Laws That Arizona Business Owners Need to Know About
Commercial real estate can be a highly lucrative investment, but it comes with significant legal responsibilities that must be understood. Arizona’s commercial real estate laws, including tenant rights and landlord obligations, play a crucial role in ensuring the success of both property owners and tenants. If you are a landlord or business owner in Arizona, understanding the legal landscape surrounding your commercial property is essential for protecting your investment and avoiding costly mistakes.
This guide is designed to help both commercial property owners and tenants understand the key aspects of Arizona commercial real estate law. Whether you are a landlord or tenant, it is important to know what to expect when it comes to managing a commercial property in Arizona.
Eviction Laws for Arizona Commercial Business Owners
Eviction laws in Arizona are straightforward but must be carefully followed to avoid legal issues. Here is what you need to know:
Termination of Month-to-Month Tenancy
A landlord can terminate a month-to-month business tenancy with a 10-day written notice. This notice must be sent via certified mail to ensure proper documentation of receipt of the notice.
Non-payment or Lease Violations
If a tenant fails to pay rent or violates other terms of the lease, the landlord can take various actions. A landlord may:
- Re-enter the premises and take possession without warning in certain cases.
- Issue a written demand for payment or correction of the violation, which is generally a prudent first step.
Forcible Detainer Action
If the issue is not resolved, a landlord may begin the process of forcible detainer to evict the tenant. Arizona law requires that:
- A hearing on forcible detainer must be held within 30 days of filing the eviction action.
- The entire process is fast-tracked and completed within 30 days.
Lien and Sale of Property
Once the landlord gains possession, they have a lien on all non-exempt personal property belonging to the business tenant. If the tenant does not pay rent within 60 days, the landlord may sell the property to cover the outstanding debt.
Maintaining Fit and Habitable Premises in Arizona
Under Arizona law, landlords must maintain commercial properties in a fit and habitable condition. Here is what Arizona landlords are required to do:
Repairs and Maintenance
Landlords are obligated to:
- Repair and maintain the property to ensure it meets building codes.
- Maintain plumbing, electrical, and HVAC systems to ensure they function properly unless the commercial lease specifies otherwise.
- Ensure the property has running hot water, air conditioning, and heating when applicable.
However, custom work or modifications requested by tenants are generally the responsibility of the tenant, unless otherwise specified in the lease.
Legal Assistance for Developers
Real estate developers should work with an experienced real estate law firm to ensure that leases signed before the property’s completion are practical and enforceable.
The Quiet Enjoyment Law in Arizona
Every commercial lease in Arizona includes a quiet enjoyment clause, which means the landlord must allow tenants to use the leased property without interference. This is a critical tenant right, as it ensures business operations are not disrupted.
- Tenant Rights: If a landlord disrupts a tenant’s business operations, the tenant may have legal recourse under the quiet enjoyment law.
- Legal Assistance: Given the complexity of this law, it is important to work with an experienced real estate attorney to fully understand your rights as a tenant or landlord.
Americans with Disabilities Act (ADA) Compliance
Businesses that are open to the public or have more than 15 employees must comply with the Americans with Disabilities Act (ADA), ensuring their facilities are accessible to individuals with disabilities. Here is what this means for commercial property owners:
ADA Modifications
- Who Pays for Modifications? Landlords and tenants should clarify who is responsible for funding any necessary ADA-related modifications, such as installing ramps or widening doorways.
- Landlord-Tenant Agreement: Ensure that any modifications required for ADA compliance are addressed in the lease agreement.
Landlord’s Repair and Maintenance Obligations
In Arizona, landlords are typically not required to make repairs or improvements to the property unless these are explicitly stated in the lease agreement. However, there are key points tenants and landlords must understand:
- Tenant Responsibilities: Tenants are generally responsible for returning the property in good condition at the end of the lease, excluding reasonable wear and tear.
- Damage by Tenants: If a tenant causes damage beyond normal use (also known as “waste”), the landlord has the right to seek compensation for repairs.
Subleasing Commercial Properties in Arizona
In Arizona, commercial tenants may have the right to sublease or assign their lease to another party, unless specifically prohibited by the lease agreement. This is an important consideration for landlords:
Subleasing Clauses
- If you are a landlord, it is essential to include a sublease approval clause in the lease agreement. This clause gives you control over who occupies your property, ensuring that tenants cannot sublease without your consent.
- Tenant Responsibilities: Tenants must understand that even if they sublease the property, they may still be held responsible for the lease terms and conditions.
Material Breaches in Arizona
A material breach is a significant violation of the lease agreement that impacts the tenant’s ability to use the premises. Arizona law distinguishes between material and immaterial breaches. For example:
- Material Breaches: Serious violations, such as failure to pay rent or causing substantial damage to the property.
- Immaterial Breaches: Minor violations that do not significantly impact the tenant’s use of the premises.
Legal Action for Material Breaches
If a material breach occurs, landlords may take legal action, including eviction or a claim for damages.
Premises Liability for Business Owners in Arizona
Commercial property owners have a duty of care to maintain a safe environment for everyone on their property. This includes both customers and employees. Failure to address hazards can lead to premises liability claims, which may result in costly lawsuits.
- Negligence Claims: Inaction or neglect of hazardous conditions can lead to claims of negligence. Business owners should regularly inspect their properties and fix any safety hazards.
- Shared Responsibility: While property owners are primarily responsible, maintenance contractors and tenants may also be liable in the case of an injury.
Need Help with Arizona Commercial Real Estate Law
If Arizona commercial real estate laws are not adhered to, tenants may have the right to compensation, Arizona commercial lease cancellation, and more. If you have any questions regarding your commercial property as a business owner, you’ll want to get in contact with real estate and law professionals who know the law.
Anthony Law Group is here to help with over 25 years of experience in business and real estate litigation. Contact us by calling 602-362-2396 to schedule a consultation, today.