PARKING CONSIDERATIONS IN COMMERCIAL LEASES
Frequently overlooked in commercial leases, the terms and conditions regarding parking can carry significant weight for landlords and tenants alike. Both landlords and tenants have a compelling interest in the parking at the premises in order to control liability, protect the premises and ensure successful operation of the tenant’s business, which benefits both the landlord and tenant. If the parking provisions in a lease are not sufficiently detailed it may lead to a dispute or litigation later on between the parties as to their rights and obligations under the lease.
The parking needs of a tenant can vary dramatically depending on the nature of the business and the type of property. It is important to fully understand the tenant’s business and what their parking needs will look like over the term of the lease. For example, the parking needs of a grocery store tenant in a suburban strip mall are very different than an office tenant in a downtown skyscraper. For every tenant, the lease needs to be carefully reviewed and drafted to ensure that the parking terms and conditions are clear and complete.
A basic parking clause may only state that the tenant is allowed to park at the premises without any further detail. However, this creates ambiguity and can lead to disputes down the road. It is prudent to consider including more detail and additional terms. For instance, the parties should consider: (1) how many parking spaces does the tenant need, (2) what happens if the tenant’s parking needs decrease or increase over time, is there overflow parking, (3) what hours will the tenant be using the parking lot, (4) will the tenant be parking cars overnight, (5) is there a fee for parking, how will it be collected, who is responsible, (6) are the parking spaces shared with other tenants/general public or are they exclusive to the tenant, (7) who is responsible for security, lighting, maintenance and upkeep of the parking spaces, (8) are the disabled parking spaces ADA compliant, (9) who is responsible for enforcing the parking rules, (10) who has control/liability for the parking spaces, (11) can the tenant sublet the parking spaces or hold events there, and (12) can changes be made to the parking spaces during the lease term. Depending on the type of property and/or business, additional questions may arise that the parties should seek to clarify in the lease before signing.
In addition to the terms agreed to by the parties in the lease, there may be governmental laws and restrictions in place regarding parking that could affect a tenant’s ability to do business at the premises. Typically, these types of issues involve the minimum and maximum parking required depending on how the property is zoned and what the property is being used for. The landlord and tenant should fully understand these laws prior to signing a lease. Imagine a scenario where a new tenant signs a lease for a commercial property that has been used historically as an office building that the new tenant intends to operate a brewery. During renovation of the premises the tenant discovers that the city/county/state requires additional parking but there is none available at the premises. Can the tenant now terminate the lease since they can’t operate? If the tenant does terminate the lease, what damages has the landlord suffered?
As you can see, it is important to thoroughly evaluate the tenant’s parking needs prior to signing the lease. In certain instances, despite being an ideal property, the tenant may need to pass on a property if it appears that they will encounter problems with parking. It is much better to learn this on the front end, rather than after the tenant has been in the property for a year or expended substantial money on renovating the premises. A prudent landlord will typically have a detailed parking addendum to attach to the lease setting forth all the terms and conditions of parking. Therefore, in many cases it is important to have experienced counsel review and assist in drafting a parking addendum for a commercial lease.
The foregoing is not intended to be exhaustive, and the information provided above does not, and is not intended to, constitute legal advice. All information, content, and materials are for general informational purposes only and do not create an attorney-client relationship. The experienced and knowledgeable attorneys at Blake Law Firm are available to answer questions on commercial leases and help you navigate any other real property issues.