What Every Tenant Should Know About Houston’s Commercial Lease Agreements

Leasing commercial property in Houston can be a big step for any business, but it comes with a lot of paperwork and legal terminology. If you’re a tenant ready to sign a commercial lease, it’s important to understand the terms you’re agreeing to. The last thing you want is to sign something you don’t fully understand, only to realize later that it puts you in a tight spot. This is where having a clear grasp of legal terms—and knowing when to seek legal advice—can make a world of difference.

At Pathway Property Lawyers, our Houston real estate law firm knows that commercial businesses and tenants need someone on their side from the start. Our real estate attorneys, Roger G. Jain and Thomas H. Smith III, can review your lease and help protect you from legal issues that might arise down the road. 

Understanding Commercial Leases in Houston

Houston’s commercial real estate market is diverse, ranging from small storefronts in upcoming neighborhoods to large office spaces in the heart of the city’s business districts. Whether you’re leasing space for a restaurant in Midtown or an office in the Galleria area, the lease agreement will set the stage for your relationship with your landlord for the duration of your tenancy. Understanding some key legal terms in that agreement could help you avoid costly mistakes down the road.

Every state has its own rules regarding real estate, and Texas is no different. The Texas Property Code, Section 93 mandates that landlords return a security deposit within 60 days of the lease ending, minus any deductions for damages beyond normal wear and tear. This law ensures that both parties have clear guidelines, but disputes often arise over what qualifies as excessive damage, which is where having an attorney could come in handy.

Chapter 92 of the Texas Property Code deals with many residential lease matters but also includes provisions about landlord liability for repairs and maintenance that can sometimes apply to commercial properties in mixed-use developments. If the building you’re leasing is older, for instance, knowing your rights as a tenant regarding repairs is crucial, especially if the building code changes during your lease term.

Rent and Common Area Maintenance (CAM) Fees

At the heart of every lease is the rent, but commercial leases often come with more than just a base rent payment. Many commercial tenants in Houston are responsible for CAM fees, which cover the cost of maintaining shared areas like lobbies, parking lots, and restrooms. 

For example, in a retail strip center, CAM fees might include landscaping or even security patrols. The lease will specify how these costs are calculated and divided among tenants, so be sure you understand them fully. These fees can fluctuate, so ask how much you’ll be responsible for over the course of the lease.

Knowing what you’re signing up for is crucial—what may look like a great deal on rent could turn expensive once CAM fees are added.

Term and Renewal Clauses

The length of your lease, known as the term, is one of the simplest but most important details. Most commercial leases in Houston will lock you into a multi-year term, often three to five years. While this can provide stability, it’s also a major commitment. What if your business grows faster than expected, and you need more space? Or what if things slow down and you no longer need such a large office? The lease term will dictate how long you’re tied to the property—and getting out early isn’t always easy.

That’s where renewal clauses come into play. Many commercial leases in Houston give tenants the option to renew, but the terms of the renewal (including potential rent increases) are often baked into the original agreement. Watch for automatic renewal clauses that kick in unless you notify the landlord within a specific timeframe—missing that deadline could mean you’re stuck for another term.

Sublease and Assignment Clauses

As your business evolves, you may find yourself in a position where you need to either downsize or relocate. In such cases, subleasing your space or assigning your lease to another tenant might be your best option. But don’t assume you have the right to do so without checking your lease. Sublease provisions outline the rules for renting out part (or all) of your space to another business, while assignment clauses cover transferring the entire lease to someone else.

Houston landlords are typically very protective of these clauses. They want to ensure that the new tenant will be just as financially stable and reliable as you. In some cases, landlords require their approval for any sublease or assignment, giving them significant control over who occupies the property. 

Improvements and Build-Out Clauses

Houston’s commercial spaces, whether a trendy spot in East Downtown or a sleek office in Greenway Plaza, often require some level of customization or build-out before you move in. The lease will dictate who pays for these improvements—also known as tenant improvements (TIs).

Sometimes, landlords offer a tenant improvement allowance to cover the costs, especially if you’re committing to a long-term lease. The key is to read the fine print. Does the lease state that you can customize the space as you see fit, or does every nail and paint color need to be approved by the landlord? And who owns those improvements at the end of the lease term? 

Contact Our Houston Real Estate Law Firm

Even if you feel confident reading through your commercial lease agreement, having an experienced real estate attorney on your side can make all the difference. At Pathway Property Lawyers, our real estate attorneys in Houston will make sure that you fully understand the terms, negotiate better provisions where necessary, and protect your rights as a tenant. Call us at 832-364-6234 or fill out our confidential contact form to learn more about your legal options.

 

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Pathways Property Lawyers

At Pathways Property Lawyers, our Houston attorneys are here to answer all your legal questions and help you protect your rights regarding personal, business, commercial or investment properties. Call us or fill out our confidential contact form to learn more about your legal options.

Our law firm has considerable experience in Texas real estate law. We advise our clients on issues related to real estate transactions and litigation throughout Southeast Texas. In addition to real estate, our Houston lawyers have experience in other related areas of law, such as family law, business law, estate planning and probate. This allows us to assist clients with all related legal issues, and to take an holistic approach to your specific matter.

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