Oregon’s Residential Landlord and Tenant Act is strictly focused on residential properties like rental homes, apartments, and other places that people live. It does not affect commercial properties, and commercial rentals do not have a large law that dictates how things work with commercial spaces like office buildings, retail spaces, and buildings used for manufacturing, shipping, and other commercial enterprises.
There are no statutes or laws that dictate how commercial lease terms must work. This doesn’t mean there aren’t legal requirements that you need to know about when you own commercial property.
Working with tenants in a commercial property is often a little different than working with tenants in a residential property. While the tenants you place own their own businesses, you’re the one who owns the building. This can create some tension if the relationship isn’t managed properly.
Today, we’re taking a look at some of the laws that commercial property owners need to be aware of when they’re renting out their property.
Understand the Lease Terms and Options
Owners can use a gross lease or a modified gross lease when renting out commercial property in Portland. A triple net lease is usually what owners tend to use. It’s legal and common for commercial properties in Portland. They require your tenants to pay a monthly rent and also to contribute or completely pay for the expenses associated with operating the building and the communal spaces. This might include taxes and utilities as well as maintenance. Not all tenants love the idea of a triple net lease, which means you may need to offer a lower rent in order to incentivize the signing of their lease.
Subleasing of Portland Commercial Property
You have the power to decide whether your commercial tenants are permitted to sublease their property, or a portion of their property, to another tenant. However, to deny your consent, you’ll need a valid reason. If you don’t want your tenants subletting an office, a conference room, or any other leased space to a subtenant, you need to put your reasons for the objection in writing. If you don’t, it’s implied by Oregon law that you don’t have a problem with it.
Rent Control Laws Do Not Apply
The new rent control laws enacted in Oregon do not apply to your commercial properties. So, you won’t need to follow any rent control laws with your commercial property, and you can continue to set market rents and raise them when appropriate.
Evicting Commercial Tenants
The most common reasons for evicting a commercial tenant are the same as when you evict a residential tenant; nonpayment of rent and lease violations. If your commercial tenant stops paying rent or does something that’s outside of the terms and scope of your lease agreement, you can begin eviction proceedings. When you’re ready to evict, talk to a qualified attorney or your property manager. Then, serve an eviction notice which is essentially a Three Day Notice. Your commercial tenants will have those three days to rectify the problem and catch up with rent. If the eviction is due to nonpayment of rent, you can estimate the amount that’s owed on the notice, but make sure that you note it’s an estimate and not an exact figure.
You can generally negotiate any lease terms with your commercial tenants that make sense. Just make sure they’re legally compliant.
If you have any questions or need any help, please contact us at Performance Properties. We have experience managing commercial properties in Portland as well as residential homes.