USA - TEXAS Law and Practice Contributed by: Brad Holdbrook, Mary Mendoza, Michael Coleman and James Barnett, Haynes and Boone, LLP
pay a nominal fee, usually several hundred dol - lars, upon formation, while foreign entities doing business in Texas must pay a fee of similar size to register. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time Texas law recognises several types of arrange - ments for the use of real estate without outright purchase. These arrangements include leases, which can be for residential or commercial prop - erties, and licence agreements that permit the use of property for specific purposes without transferring ownership. Additionally, easements grant the right to use a portion of another’s prop - erty for a particular function, such as access or utility placement, and are another form of recog - nised arrangement. 6.2 Types of Commercial Leases There are several types of leases applicable in Texas, including without limitation the following. Gross Lease This type of lease involves a tenant paying an annual flat fee that covers both the rent and yearly operating expenses like utilities, clean - ing services, and taxes. A variation, known as a modified gross lease, may see tenants respon - sible for some building operational costs not included in the annual fee. Percentage Lease Commonly used for retail spaces, this lease type includes base rent and operating expenses, with the addition of a percentage of the business’s monthly gross sales. This structure aligns the
landlord’s interests with the tenant’s sales per - formance. Net Lease This is particularly prevalent in commercial prop - erties. Tenants pay base rent plus a share of operating costs, with the specifics varying by the lease type. Net leases can be single net (tenant pays base rent and property taxes), double net (tenant also pays insurance), or triple net (tenant pays base rent, property taxes, insurance, and possibly other expenses like utilities and main - tenance). 6.3 Regulation of Rents or Lease Terms In Texas, rents and lease terms are generally freely negotiable between landlords and ten - ants without widespread state-level rent control or regulation. However, local ordinances may impose specific regulations, and any adjust - ments or protections introduced during the COVID-19 pandemic would be subject to local jurisdiction decisions. For the most part, com - mercial and residential rental agreements in Texas are determined by the lease terms agreed upon by the parties involved. 6.4 Typical Terms of a Lease Commercial lease terms, including rent, are gen - erally freely negotiable between the landlord and tenant without extensive regulation by the Texas state government. While there are laws protect - ing against discrimination and ensuring basic contractual fairness, the specific terms, includ - ing rent amounts and lease durations, are largely determined by the parties involved and market conditions. Regarding the COVID-19 pandemic, there have been temporary measures and mora - toriums on evictions in various jurisdictions, but these are temporary and vary locally rather than being permanent or state-wide regulations.
1310 CHAMBERS.COM
Powered by FlippingBook