Terminating a Commercial Lease in Arizona

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Terminating a Commercial Lease in Arizona
Real Estate

It is not uncommon for a commercial lease agreement to last years, or even decades. Nor is it uncommon for them to last for a far shorter duration. Either way, the eventual result is nearly always the same: the lease comes to a point of termination. But how does the termination of commercial leases differ from that of residential leases in Arizona?

The majority of commercial lease agreements—particularly when the tenant has been sure to hire an attorney experienced with commercial leases—tend to include a holdover provision. These clauses detail the process that should happen when the agreed term of a lease terminates without any formal extension having been signed and filed, which should provide a tenant as much time as possible to clear out (and 90 days is not uncommon here). But where a holdover agreement is not included and the end of the tenancy is not enforced immediately, a tenancy tends to shift automatically into a month-to-month lease; and there is a provision in Arizona law—at Arizona Revised Statute section 33-341(B)—that resolves the issue of termination, as such:

A lease from month to month may be terminated by the landlord giving at least ten days notice thereof. In case of nonpayment of rent notice is not required.

Residential lessees, on the other hand, are given more time by Arizona Revised Statute section 33-1375(B); to wit:

The landlord or the tenant may terminate a month-to-month tenancy by a written notice given to the other at least thirty days prior to the periodic rental date specified in the notice.

Ten days is a relatively low amount of notice to provide a commercial lessee on a month-to-month lease, and it can be jarring to a commercial tenant to have to clear out in such short order.

It is therefore vital that a lessee ensure a holdover provision be included in the lease from the get-go.

If you’re either looking to enter into a commercial lease or facing termination of a commercial lease in Tempe or anywhere else in the state of Arizona, Provident Law’s attorneys stand ready to help. We structure, negotiate and document a variety of real estate and financing transactions, such as leases, purchase and sale agreements, loans and development agreements for a variety of commercial and residential projects—and we litigate issues of ownership when necessary. Contact us for more details.

Christopher J. Charles is the founder and Managing Partner of Provident Law ®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS ® (the “AAR”). Mr. Charles holds the AV ® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions.

Christopher is a licensed Real Estate Instructor and he teaches continuing education classes at the Arizona School of Real Estate and Business. He can be reached at Chris@ProvidentLawyers.com or at 480-388-3343.

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