Responsibilities Of Property Managers During The Term Of A Commercial Lease Agreement

“Responsibilities Of Property Managers During The Term Of A Commercial Lease Agreement” written by Mike Marko

Do you know your responsibilities as a property manager during the term of a commercial lease agreement?

There are a lot of things that a property manager is responsible for, but sometimes it can be confusing something is the responsibility of the tenant.

To be an effective property manager during a commercial lease term, you should know your responsibilities. Knowing your responsibilities will help guide you towards taking the right actions that you should conduct throughout the commercial lease term.

If you are not fully aware of your responsibilities, then let’s talk about it in this article.

Property Manager’s Top 5 Responsibilities During Commercial Lease

A commercial lease is very different than a residential lease.

Being known as to what your responsibilities as a property manager are during a commercial lease is helpful for you and the business to manage these types of leases effectively. Understanding your exact responsibilities during a commercial lease will help you to avoid having conflicts with the business owner who rented the commercial property.

You will also maintain a good reputation as a property manager when you are not receiving any complaints from your tenants.

Commercial leases can be very detailed in terms and responsibilities for both parties to the lease. Understanding your responsibilities as a property manager throughout a commercial lease is the first step to running an effective commercial property management business.

1. Comply With Building Codes

Part of the contract when agreeing to a commercial lease is the standard requirement that all building codes have been complied with prior to renting the property to the commercial business. When following and completing building codes there are standards that need to be followed when you are managing a commercial property.

Know Local Requirements

If you are not familiar with building codes in your area it is best to check with local and State-run government agencies to get the list and requirements. Basically, a building code is a set of rules that discuss the different standards and requirement for the construction and maintenance of the building or buildings that will be rented through the commercial lease process.

When running a commercial leasing company you need to make sure that you and the commercial property that you manage are following the standards of safety, habitability, and accessibility that are required by the state and the local governments.

Make Sure The Property Is Ready

Before allowing a business owner to lease a commercial property, the property manager should fix and adjust or be able to accommodate the needs and the requirements of the business that will be renting the unit. That includes fixing any issue that may be present in the property.

Part of being an effective commercial property business is staying abreast or on top of any changes to building codes as building standards and requirements are added or removed in these codes regularly. When renting a commercial property you should develop a way to maintain a regular inspection of the commercial property to make sure that it complies with the building codes all the time.

If you fail to maintain your compliance with the building codes your property management business could face serious legal consequences if you knowingly proceeded with leasing the commercial property.

Running an effective and reputable commercial property management business requires you to stay in compliance with the building codes. It is better to be careful and watchful with the building codes on a regular basis in your business to prevent non-compliance to these codes.

2. Negotiate Clear Terms For Lease Agreement

Normally a commercial lease agreement is a contract that will detail responsibilities and terms for the rental and it is normally prepared by a property manager or a landlord.

When drafting or writing a commercial lease it is best to try to include terms and clauses that are advantageous to the side of the property manager. Knowing exactly what rents to charge, terms to include, and any other specific details for the contract or commercial lease is important to determine prior to your tenant signing the lease agreement.

Discuss The Terms

As part of the authorization process for the commercial lease, all areas and terms of the agreement should be discussed and explained in detail.  That way the tenant can make negotiations pertaining to some specific terms prior to finalizing the contract.

During the discussion on the lease term agreement, both parties should agree to all the terms and any clauses that will be in effect during the rental of the property. The commercial lease should be clear to both the parties about the responsibilities that are included in the agreement.

Questions For The Tenant

If you are just new in managing a commercial lease or are looking for ways to make your agreements more effective the following are several questions that you should consider discussing with the tenant and including on the commercial lease:

  • Who will be responsible for cleaning the leased out space?
  • What changes can the tenant make?
  • Can the tenant alter or customize the space, superficially or structurally?
  • What are the repairs that the tenant should be responsible for?
  • What is considered a timely response for minor repairs?
  • If space is structurally or superficially altered who is responsible to return space to pre-rental condition?
  • Discuss and include any costs or times detailing alterations and returning of space to pre-rental form prior to finalizing the commercial lease with the tenant.

3. Protect The Commercial Property

A commercial property much like a residential property needs to be managed and maintained effectively by the property management firms overseeing the commercial lease for the property. Your management firm should always have proper insurances and terms in the contracts that detail when and if natural disasters like floods, hail damage, tornados, etc. that can happen. Detailing who is responsible and requiring and detailing who is responsible to provide the proper insurance coverage for these types of occurrences can help to minimize these from events.

Part of protecting the commercial property is to make sure that all terms of the contract lease including possible requirements for security systems, insurance coverages, and other possible losses are up to date. By being detailed and following routine inspections of the property you will also minimize the expenses that may occur to the property.

To give you an idea of what you should be inspected on a regular basis to protect your property, here is a basic list we would suggest:

  • Locks of doors and windows
  • Security systems and cameras
  • Roofing and Paneling
  • Electrical and heating units
  • Smoke and fire alarms
  • Updated business and building insurances
  • Air conditioning units, Elevators inspections and certificates, and other electrical store rooms maintenances are kept up to date

4. Be Responsible In The Maintenance And Repair Of The Commercial Property

A commercial lease could be for part of a larger building that you are managing. Even if the tenant should be responsible for the commercial property space they are renting during the commercial lease term you as the property managers also have a responsibility to keep the building in safe and constant running status.

Maintenance and repairs of the commercial property are almost always the responsibility of the property manager.

To keep the commercial property in good condition you should be quick in fixing any necessary damages that are part of the maintenance and repair of the commercial property. By doing this and completing regular required maintenance of building facilities you can prevent the property from having more damage as well as keeping the building in the best operational status.

Depending on the responsibilities that are agreed upon in the lease agreement, the responsibilities of a property manager when it comes to maintenance and repair may include:

  • Heating and air conditioning maintenance
  • Removal of waste and hazardous materials
  • Electrical units and maintenance
  • Cleaning and maintaining communal areas such as bathrooms and hallways
  • Window and door security for the shell of the building
  • Water faucets and piping for the building with regular maintenance
  • Elevator maintenance and other staircases and building storerooms

5. Attain Various Insurance Coverage

The commercial lease needs to detail what responsibilities that the renter and the property management company have regarding insurances to protect the property. Having insurance for the buildings, the commercial business occupying the space in the building, and for the commercial properties is one of the requirements under the State laws that need to be detailed and addressed in the commercial leases for the property.

Commonly insurance should cover losses and damages to the building, fire damage, flooding damage. Insurance should include coverages for the equipment that is part of the property, such as computers, walls, desks, and any other items used inside the property. If a commercial company has large or expensive equipment in the property, it is normally their responsibility to ensure this equipment, and the building manager’s responsibility to make sure that these insurances are in effect.

During the discussion of the commercial lease agreement, it is the property manager’s responsibility to clearly discuss to the tenants about the instances that will not be covered by the property insurance and those that will not be covered. From these discussions, you should add detailed terms and responsibilities regarding specific insurances to the commercial property and space rented to avoid any legal challenges or misunderstandings that can happen if a loss or damage occurs.

Do not hesitate to require lists of equipment in the property or requirements for insurance in the commercial lease contract. The more detailed you are helping to protect you and your property management firm if a loss or damage ever occurs at the property.

Final Thoughts On Responsibilities Of Property Managers In A Commercial Lease

Property managers should be knowledgeable of what their responsibilities are for the duration of a commercial lease. By using the responsibilities guideline presented in this article, you’ll be a more effective commercial property manager. Take these responsibilities seriously to help maintain a good image as a property manager.

Please comment below with any questions or feedback about this article.




Suggested Articles:
1. Understanding Property Management Training
2. What You Need To Know About A Property Manager
3. 7 Important Terms That Should Be In A Rental Or Lease Agreement

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Article: Responsibilities Of Property Managers During The Term Of A Commercial Lease Agreement

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