Some Landlord Considerations for Commercial Lease Agreements with Small Businesses

by Joseph Kemmerling

DISCLAIMER: This is a broad overview of landlord-tenant disputes for informational purposes only and should not be construed as legal advice.

            In the world of real estate litigation, it is not unusual to encounter landlord-tenant matters involving lease disputes with underlying agreements that have not been prepared or reviewed by legal counsel. This is often seen in commercial lease agreements with small businesses and the hesitation to incur legal fees and other expenses to maximize the return on investment. One common refrain from landlords is that it is more cost-effective for a landlord to prepare a lease on their own rather than hire counsel. However, this can be a mistake. Even if a landlord has not had difficulties with tenants in the past, drafting and executing a lease without an attorney can lead to a more complicated legal process when a breach of the lease occurs, as cases can become entirely based on interpretation of the terms and conditions of the contract. As such, if the lease is not crafted to protect the landlord’s interests, it can become more difficult to litigate the dispute.

            Some landlords rely upon form leases available online, those inherited when acquiring the property, or from other sources. However, when a landlord uses a form lease, those agreements are not specifically crafted for each individual landlord-tenant situation. This may lead to significant disparities in the lease’s language and the terms and conditions the landlord was trying to establish. Specific legal provisions relevant to Pennsylvania law can also be left out of form leases. Because of this, it is highly recommended that a landlord consult counsel when entering into a lease agreement to prevent disagreements before they come up by having a carefully crafted lease.

            While a lease with clearly defined provisions is recommended, disputes will inevitably arise from time to time. If the parties cannot resolve their differences amicably, the landlord typically starts the litigation process by issuing a Notice to Quit, which needs to be drafted to conform with specific legal requirements. The Notice to Quit usually needs to be served to the tenant before filing the suit, and the notice period varies depending on the circumstances.

Depending on the underlying issues and amount of money in controversy the case will be filed initially before a Magisterial District Judge (“MDJ”). MDJ proceedings provide a quick and simplified process that can be completed without significant costs. Both parties will present their case in front of the MDJ, who will then make a decision regarding monetary damages, possession, or other matters relating to the lease. If the landlord is victorious, the tenant can appeal to the county court, known as the Court of Common Pleas. However, if the tenant does not appeal, the MDJ rules allow for a quick eviction process. If the landlord loses, the landlord can also appeal to the Court of Common Pleas. It is important to recognize deadlines to file these appeals; failing to appeal timely can significantly impact a landlord’s rights.

            Thereafter, if a case is appealed to the Court of Common Pleas, the case will proceed through the county court system, often resulting in either a court-mandated arbitration or a non-jury trial to determine the amounts of damages and right to possession. The county court case experience can vary, and it is a more extensive, rules-based process than an MDJ case. As such, when confronted with a landlord-tenant dispute, the best way to determine next steps is to contact an attorney to provide guidance on the specific issues and best path forward.

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