What Are the Different Types of Commercial Leases in Colorado?

Whatever your role in leasing a commercial property, you must be appropriately familiar with state and city laws governing commercial properties, as they may differ greatly from residential property laws. In most cases, commercial tenants are afforded fewer protections than residential tenants in Denver, Colorado. For example, though certain acts proscribe that security deposits must be held for residential landlords, the same does not apply to commercial leases. In fact, the law does not regulate many of the terms of a commercial lease In Denver. No laws restrict rent amounts, sub-leases, assignments, or maximum lease terms (Colorado courts have held that indefinite renewals are not enforceable, however). The one highly regulated area of landlord and tenant relationships in Denver, CO, is evictions.

It is also important to understand the different types of commercial leases available in Colorado.:

  • Gross leases: This type of lease encompasses the cost of operating expenses in the rental amounts. In a gross lease, the landlord pays for most, if not all, of the property expenses
  • Net leases: In this type of commercial lease, the tenant pays a portion or all of the property’s operating expenses, such as insurance, taxes, and maintenance fees. Variations of the net lease

include single-net, double-net, and triple-net leases

  • Modified gross leases: This type of lease is a middle ground between gross leases and net leases. In a modified gross lease, specific expenses may be assigned to either the tenant or the landlord as agreed upon

If you need legal assistance with a commercial lease, please get in touch with our law firm. Our legal team has extensive experience representing clients in real estate law. We would be proud to represent your interests in pursuing a satisfactory outcome to your case.

What Are the Key Clauses to Understand in Your Commercial Lease?

The key clauses that you must understand in a commercial lease include the following:

  • Maintenance and repair: This part of a commercial lease outlines the responsibilities of either party specifically related to the upkeep of the property
  • Renewal and termination clauses: These details relate to the extension of the commercial lease and the terms under which either the lessor or the lessee may terminate the agreement
  • Rent adjustments: You must understand when and how rent may be adjusted. It is likely that rent will increase over time. This clause explains whether it’s adjusted annually or based on certain triggers
  • Sublease and assignment: This clause determines whether the commercial tenant can sublet their space or assign the lease to another entity
  • Use and exclusivity clauses: These clauses define how the tenant can use the commercial space. An exclusivity clause ensures that the landlord doesn’t lease any other premises in the same real estate property or complex to a direct competitor of the lease

Are There Any Colorado-Specific Commercial Leasing Laws?

There are a number of Colorado-specific commercial leasing laws that tenants and landlords must be aware of. These include:

  • ADA compliance: All commercial properties must comply with the Americans with Disabilities Act, ensuring appropriate accessibility for people with different types of disabilities
  • Disclosure requirements: Per Colorado law, there is a mandate requiring certain disclosures be made by a commercial leasing agency for commercial properties
  • Security deposits: Our state does not have a statutory limit on security deposits for commercial real estate properties. However, the terms of the return should be clearly defined in the commercial lease agreement
  • Termination and eviction: The state of Colorado has specific notice requirements for terminating commercial leases and a carefully defined process for the eviction of commercial tenants

What Are the Legal Requirements and Tips for Commercial Leases in Denver, CO?

Before entering a commercial lease, it is essential to consider several different factors and requirements before signing on the dotted line.

The law dictates when a landlord can charge an application fee and what disclosures they must make about how the fee is used.

In most cases, collecting taxes from commercial tenants on top of their commercial lease rents is unnecessary.

Tenants have a right to privacy. Property owners may only enter the commercial property under certain circumstances and for certain reasons.

When tenants do not pay their bills, there are laws in place and specific steps that have to be taken when you approach the legal matter of non-payment.

A tenant can sublet the commercial property unless the commercial lease states otherwise. Tenants facing bankruptcy may sublet without the consent of a landlord.

Commercial property must be fit for tenancy according to the law.

Get it in Writing

If it’s not in writing, it didn’t happen. Commercial leases are contracts. As such, a lease is only as good as the provisions and language laid out in the actual contract document. Even if the tenant and landlord agreed to all terms in an oral conversation, specific terms must be laid out on a written document in order for them to be legally enforceable.

Determine the Authority of the Property Manager

It is common for tenants to have little to do with the actual property owners of their commercial property. Simply put, dealing directly with landowners is often considered impractical. However, it is wise for tenants to determine exactly what powers the property managers actually have in relation to the property. Failure to determine the authority of the property manager can negatively affect the success of a commercial lease.

Thoroughly Inspect the Property Before Signing

Never sign a commercial lease without personally and physically inspecting the property beforehand. A comprehensive inspection can alert you to unacceptable conditions of the property that the landlord may have decided not to disclose to you.

Research All Parties Involved in the Lease

Tenants are advised to research and investigate the parties claiming to be property owners or landlords. Similarly, it is recommended for property owners and landlords to research prospective tenants.

Understand What ‘Permitted Use’ Means

It is essential to thoroughly understand the terms of the permitted use clause in an agreement. Permitted use clauses specify what types of activities are allowed to be conducted on the leased premises. Additionally, understand that prohibited uses are not allowed on the premises.

You Can Negotiate for More Flexible Lease Terms

Commercial leases can last a very long time. If you’re starting a new business, signing a contract worth thousands of dollars each month for over a decade may not be in your best interest. You have the right to negotiate for better terms.

Schedule a Consultation with Our Legal Team Today

If you are seeking to lease a commercial property, either as a business owner or a property owner, it is highly recommended that you retain professional legal representation from experienced commercial real estate lawyers. Our legal team has extensive experience in commercial real estate law and would be proud to assist you in pursuing the optimal outcome for your case.

To learn more about our legal services, don’t hesitate to get in touch with our law firm to schedule your initial consultation today. You may reach us at 720-776-8853.