USA – TEXAS Law and Practice Contributed by: Taylor Cooksey, David Brooks, Serena Kramer and Philip Kinkaid, Cokinos | Young
The federal Corporate Transparency Act (CTA) would have imposed an important new governance require - ment on many private companies by requiring report - ing of their beneficial owners. An interim rule issued in 2025 under the CTA renders the CTA inapplicable to US entities, but this might change as the Financial Crimes Enforcement Network (FinCEN) finalises its final rule in 2026. Furthermore, FinCEN has adopted a new rule for transactions involving entity or trust buyers of residential real estate, requiring that certain beneficial ownership information be reported to Fin - Taxable entities formed or doing business in Texas are subject to Texas franchise tax. The income of certain entities below a designated threshold is not subject to franchise tax. As indicated in 5.2 Main Features and Tax Implications of the Constitution of Each Type of Entity , certain entities are subject to a filing fee upon formation, and foreign entities qualifying to do business in Texas must file a registration fee; certain annual reporting may also be required, but no fee is applicable. CEN when the buyer is an entity or trust. 5.6 Annual Entity Maintenance and Accounting Compliance 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The most common types of arrangement for the tem - porary use of real estate are leases, licences and ease - ments. A lease grants the lessee exclusive possession of property for a limited duration. Licence agreements are usually for a substantially shorter duration than a lease and are not considered an interest in real prop - erty; they grant the right to occupy property for a lim - ited duration for a specific purpose. Easements grant the exclusive or non-exclusive right to use property (but not the right to occupy) for a specific purpose. 6.2 Types of Commercial Leases Net Lease The net lease is the most prevalent type of commer - cial lease in Texas. In addition to base rent, a tenant under a net lease pays a proportionate share of the landlord’s operating expenses, which may include
property taxes, insurance and maintenance costs, and which vary over time. Net leases are widely used in all commercial sectors, including office, retail and industrial. Gross Lease A tenant under a gross lease pays a fixed rent amount, and the landlord is responsible for all operating expenses. Gross leases are often used in office leas - ing, but rarely in other sectors. Percentage Lease Under a percentage lease, a tenant pays a specified percentage of its revenues as rent. The percentage rent will usually be payable in addition to a base rental amount, which will typically be lower than in other types of leases. Percentage leases are most often seen in the retail and restaurant sectors. 6.3 Regulation of Rents or Lease Terms Lease terms and rental amounts in commercial leases are largely unregulated in Texas and are negotiable by the parties. For residential leases, the Texas Property Code imposes certain obligations and restrictions on landlords, and prohibits discrimination in leasing, but lease terms are mostly negotiable, and rental amounts are unregulated. 6.4 Typical Terms of a Lease The duration of a lease is negotiable and varies depending on the nature of the business. For office leases, three to five years is common (but ten years is not uncommon), while the duration of a ground lease will typically be 15 to 25 years or more. Renewal or extension options are also frequently included in leas - es. Maintenance of a tenant’s leased premises will usu - ally be the responsibility of the tenant, although land - lords will often be responsible for the maintenance of structural components and building systems within the premises. Rent is usually payable monthly in advance, although parties may negotiate for rent to be payable quarterly or annually.
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